Farming Income and the AgriStability and AgriInvest Programs Harmonized Guide

2019

For AgriStability and AgriInvest participants in British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Yukon.

RC4408(E) Rev. 19

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Before you start This guide will help you complete your forms to participate in the AgriStability and AgriInvest programs.

■ AgriStability – a margin-based program that provides support when you experience larger income losses

■ AgriInvest – a self-managed producer-government savings account designed to help producers:

– manage small income declines

– make investments to manage risk and improve market income

Review this guide to make sure you fill out your forms correctly. Providing correct information on your forms helps us calculate your benefits accurately and prevents delays.

Don’t forget to include your Participant Identification Number (PIN) on your form. Missing PINs is one of the top reasons for processing delays.

This guide gives you general information. For complete program rules, see the Canadian Agricultural Partnership AgriStability and AgriInvest Program Guidelines.

Is this guide for you? Use this guide and forms if all of the following applies to you:

■ want to participate in the AgriStability or AgriInvest programs, or both for 2019

■ farm in British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, or the Yukon

■ earned income as a self-employed farmer or partner of a farm partnership, or by renting land under a crop share arrangement

■ are not a trust, a non-resident, a corporation, or a Status Indian farming on a reserve. Contact your Administration for a separate form and guide for these operations

Do not use this guide and forms if you:

■ do not want to participate in the AgriStability or AgriInvest programs:

– use guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income

– file form T2042, Statement of Farming Activities

■ farm in Alberta, Saskatchewan, Ontario, or Prince Edward Island:

– use guide RC4060, Farming Income and the AgriStability and AgriInvest Programs

– file form T1163, Statement A – AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals

■ farm in Quebec:

– use guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income

– file form T2042, Statement of Farming Activities

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AgriStability and AgriInvest contact information Federal Administration contact information ■ AgriStability participants in Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, and the Yukon.

■ AgriInvest participants in all provinces except Quebec.

Program Administration PO Box 3200 Winnipeg MB R3C 5R7 Toll-free telephone: 1-866-367-8506 Calling from outside Canada: 204-926-9650 TTY: 613-773-2600

You can access the program websites at agr.gc.ca/agristability and agr.gc.ca/agriinvest.

Provincial Administration contact information ■ For Alberta, contact:

Agriculture Financial Services Corporation 5718-56th Avenue Lacombe AB T4L 1B1 Toll-free telephone: 1-877-899-2372 Fax: 403-782-8348 Toll-free fax: 1-855-700-2372 Email: info@afsc.ca Website: afsc.ca

■ For British Columbia, contact:

British Columbia Ministry of Agriculture AgriStability Administration 200-1500 Hardy Street Kelowna BC V1Y 8H2 Toll-free telephone: 1-877-343-2767 Fax: 1-250-712-3269 Email: Agristability@gov.bc.ca Website: gov.bc.ca/agristability

■ For Ontario, contact:

Agricorp 1 Stone Road West Box 3660, Stn. Central Guelph ON N1H 8M4 Toll-free telephone: 1-888-247-4999 Fax: 519-826-4334 Email: contact@agricorp.com Website: agricorp.com

■ For Prince Edward Island, contact:

AgriStability Administration Agricultural Insurance Corporation PO Box 400 7 Gerald MacCarville Drive Kensington PE C0B 1M0 Toll-free telephone: 1-855-251-9695 Fax: 902-836-8912 Email: PEIAgriStability@gov.pe.ca Website: princeedwardisland.ca

■ For Quebec, contact:

La Financière agricole du Québec Toll-free telephone: 1-800-749-3646 Website: fadq.qc.ca

■ For Saskatchewan, contact:

Saskatchewan Crop Insurance Corporation (SCIC) PO Box 3000 484 Prince William Drive Melville SK S0A 2P0 Toll-free telephone: 1-866-270-8450 Toll-free fax: 1-888-728-0440 Email: agristability@scic.gov.sk.ca Website: saskcropinsurance.com

Forms and publications Use the following forms with this guide:

■ T1273, Statement A – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals

■ T1274, Statement B – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations

■ T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses

■ T1275, AgriStability and AgriInvest Programs Additional Information and Adjustment Request

Throughout the guide, we refer to other forms and publications. If you need any of these, go to canada.ca/cra-forms.

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Where to mail your forms and return Send the following to the Winnipeg Tax Centre:

■ your income tax return

■ form T1273

■ form T1274

■ form T1175

Mailing address:

Canada Revenue Agency Winnipeg Tax Centre PO Box 14001, Station Main Winnipeg MB R3C 3M3

The Winnipeg Tax Centre is the only tax centre that processes these forms.

Do not attach correspondence or anything else intended for the AgriStability or AgriInvest programs to your forms.

See “How to send additional information for AgriStability and AgriInvest” below.

How to send additional information for AgriStability and AgriInvest Use form T1275, AgriStability and AgriInvest Programs Additional Information and Adjustment Request, to send additional information for your AgriStability and AgriInvest form.

Send form T1275 and any attachments to your Administration at the same time that you send your form T1273 to the CRA.

To get this form, go to agr.gc.ca/agristability and agr.gc.ca/agriinvest or call 1-866-367-8506.

For more information, see “Adjustments” on page 20.

AgriStability and AgriInvest form deadline The deadline to send your 2019 AgriStability and AgriInvest form without penalty is September 30, 2020. For more information on deadlines, see “Dates to remember” and “Important information for AgriStability and AgriInvest” on page 13.

Do you need more information? If you have questions about your participation in AgriStability, contact either:

■ the federal Administration at the address provided on the previous page if you farm in Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, or the Yukon

■ your provincial Administration at the address provided on the previous page if you farm in British Columbia

If you have questions about your participation in AgriInvest, contact:

■ the federal Administration at the address provided on the previous page. The federal Administration delivers AgriInvest in all provinces except Quebec

If you have questions about reporting your farm income for tax purposes, contact:

■ the CRA at 1-800-959-5525

This guide explains the most common tax situations.

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What’s new for 2019?

New capital cost allowance (CCA) classes: Class 54 (30%) and Class 55 (40%) for business investment in zero-emission vehicles Two new capital cost allowance (CCA) classes have been created for zero-emission vehicles acquired after March 18, 2019, Class 54 and Class 55.

Class 54 has a rate of 30% and includes zero-emission vehicles that would normally be included in Class 10 or 10.1.

Class 55 has a rate of 40% and includes zero-emission vehicles that would normally be included in Class 16.

A zero-emission vehicle has to be acquired, and become available for use, after March 18, 2019, and before 2028 to be eligible for the enhanced first-year CCA deduction. These new classes will have an enhanced first-year CCA deduction of 100% for zero-emission vehicles that become available for use before 2024. CCA will still be calculated on a declining-balance basis, and a phase-out will begin for property that becomes available for use after 2023.

For more information, see “Classes of depreciable property” on page 79.

Enter your business number on your form The Government of Canada is taking steps to improve and streamline how businesses interact with the government. Farming businesses will be able to use their business number as a standard identifier when dealing with government departments and programs. Your business number is your unique 9-digit number assigned by the Canada Revenue Agency.

Starting with the 2019 program year, we are collecting the business number on the form T1273. If you have a business number, you must enter it on your form. For information on how to register for a business number, go to canada.ca/taxes and select “Business number registration.”

Change in use rules for part of property such as Multi-unit residential properties Under proposed legislation, a taxpayer can elect that the deemed disposition that normally arises on a change in use of part of a property not apply in respect of changes in the use of property that occur on or after March 19, 2019. As a result, any accrued capital gain on the property can be deferred until the property is disposed of in the future. For more information, see guide T4037, Capital gains.

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The term income tax return used in this guide has the same meaning as Income Tax and Benefit Return.

Our publications and personalized correspondence are available in braille, large print, e-text, or MP3 for those who have a visual impairment. For more information, go to canada.ca/cra-multiple -formats or call 1-800-959-5525.

This guide uses plain language to explain the most common tax situations. It is provided for information only and does not replace the law. If you need help after you read this guide, call our Business Enquiries line at 1-800-959-5525.

La version française de ce guide est intitulée Guide harmonisé des revenus d’agriculture et des programmes Agri-stabilité et Agri-investissement.

Unless otherwise noted, all legislative references are to the Income Tax Act and the Income Tax Regulations.

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Table of contents Page Page

Chapter 1 – General information ..................................... 8 Farming income .................................................................... 8 How to report your farming income ................................. 9 Business records ................................................................... 11 Instalment payment ............................................................. 12 Dates to remember ............................................................... 13 Important information for AgriStability and

AgriInvest .......................................................................... 13 Employment insurance (EI) premiums ............................ 14 Goods and services tax/harmonized sales

tax (GST/HST) .................................................................. 14 What is a partnership? ......................................................... 14 Chapter 2 – Your AgriStability and AgriInvest

programs ............................................................................ 17 Participating in the programs ............................................ 17 Form T1273, Statement A – Harmonized AgriStability

and AgriInvest Programs Information and Statement of Farming Activities for Individuals ......... 19

Form T1274, Statement B – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations ......................................................... 19

Completing the forms .......................................................... 20 Participant information ....................................................... 21 Other farming information ................................................. 23 Identification ......................................................................... 24 Chapter 3 – Calculating your farming income or loss . 24 Commodity and Program payment code lists ................ 24 Income .................................................................................... 24 Income from program payments ....................................... 31 Other farming income ......................................................... 32 Summary of income ............................................................. 35 Expenses ................................................................................. 35 Commodity purchases ........................................................ 38 Repayment of program benefits ........................................ 39 AgriStability program – Allowable expenses .................. 39 AgriStability program – Non-allowable expenses .......... 42 Summary of income and expenses .................................... 53 Partnership information chart ............................................ 58 Chapter 4 – Inventories, purchased inputs,

deferrals, receivables and payables ............................. 59 For AgriStability participants ............................................. 59 Has the productive capacity of this operation

decreased during the program year due to disaster circumstances? .................................................................. 60

Crop inventory valuation and productive capacity ....... 61 Livestock inventory valuation ........................................... 66 Livestock productive capacity ........................................... 67 Purchased inputs .................................................................. 68 Deferred income and receivables ...................................... 69

Accounts payable .................................................................. 70 Chapter 5 – Capital cost allowance (CCA) ...................... 71 What is capital cost allowance? .......................................... 71 How much CCA you can claim .......................................... 73 Form T1175, Farming – Calculation of Capital Cost

Allowance (CCA) and Business-use-of-home Expenses ............................................................................. 74

Classes of depreciable property ......................................... 79 Special situations ................................................................... 84 Chapter 6 – Eligible capital expenditures ....................... 90 Chapter 7 – Farm losses ...................................................... 92 Fully deductible farm losses ............................................... 92 Restricted farm losses (partly deductible) ........................ 93 Non-deductible farm losses ................................................ 94 Non-capital losses ................................................................. 94 Chapter 8 – Capital gains ................................................... 95 What is a capital gain?.......................................................... 95 What is a capital loss?........................................................... 95 How to calculate your capital gain or loss........................ 95 Restricted farm losses ........................................................... 98 Qualified farm or fishing property and cumulative

capital gains deduction .................................................... 98 Transfer of farm or fishing property to a child ................ 100 Transfer of farm or fishing property to a spouse or

common-law partner ........................................................ 102 Other special rules ................................................................ 102 Information reporting of tax avoidance transactions ..... 102 Commodity list ..................................................................... 104 Program payment list A ...................................................... 107 Program payment list B ...................................................... 108 Inventory code list ............................................................... 109 Regional code list ................................................................. 133 Units of measurement code list ........................................ 135 Expense code list .................................................................. 135 Productive capacity list ....................................................... 136 Capital cost allowance (CCA) rates .................................. 138 How to calculate the mandatory inventory

adjustment (MIA) ............................................................. 140 GST/HST rates ...................................................................... 141 Online services ..................................................................... 143 For more information .......................................................... 145

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Chapter 1 – General information

Farming income Farming income includes income you earned from the following activities:

■ soil tilling

■ livestock raising or showing

■ racehorse maintenance

■ poultry raising

■ dairy farming

■ fur farming

■ tree farming

■ fruit growing

■ beekeeping

■ cultivating crops in water or hydroponics

■ Christmas tree growing

■ operating a chicken hatchery

■ operating a feedlot

In certain circumstances, you may also earn farming income from:

■ raising fish

■ market gardening

■ operating a nursery or greenhouse

■ operating a maple sugar bush (includes the activity of maple sap transformation into maple products if this activity is considered incidental to the basic activities of a maple sugar bush, such as the extraction and the collection of maple sap, which are farming activities)

Generally, livestock are domestic animals bred, raised, or kept on a farm or ranch, normally in an agricultural setting, for commercial profit. They may also be used in the production of commodities such as food, fiber, and labour. For more information, see Interpretation Bulletin IT-427, Livestock of Farmers.

The raising or breeding of animals, fish, insects or any other living thing, to be sold as pets is not a farming activity. It is considered a business activity and must be reported as business income on form T2125, Statement of Business or Professional Activities.

Generally, farming income does not include income you earned from working as an employee in a farming business, from trapping or from sharecropping. For more information on sharecropping arrangements, see Income Tax Folio S4-F11-C1, Meaning of Farming and Farming Business. For partnerships or joint ventures, see Income Tax Folio S4-F16-C1, What is a Partnership?

Note Income earned from the following is not allowable for AgriStability or AgriInvest even if it may be considered farming income for income tax purposes:

■ aquaculture

■ trees and seedlings sold for use in reforestation

■ wood sales

■ peat moss

■ wild game reserves

■ cannabis (except for industrial hemp)

For more information on how to report income earned from non-allowable commodities, see “Income” on page 24.

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Note Sales and purchases of supply managed commodities are not allowable for AgriInvest.

Reporting income and penalties Include all your income when you calculate it for tax purposes. If you fail to report all your income in this year or in the last three years, you may be subject to a penalty of 10% of the amount you failed to report after your first omission.

A different penalty may apply if you knowingly, or under circumstances amounting to gross negligence, participate in the making of a false statement or omission in your Income Tax and Benefit Return. In such a case, the penalty is 50% of the tax related to the omission or false statement (minimum $100).

For more information about penalties, go to canada.ca/penalty-information-returns.

When you must start reporting income and can start deducting expenses You must start reporting your income and can start deducting your expenses when your business starts. We look at each case on its own merits. Generally, we consider your business to have started whenever you begin some significant activity that is a regular part of the business, or that is necessary to get the business going.

Suppose you do research on how to start a business in the hope of going into a business of some kind. We would not consider that as a significant activity that is a regular part of the business. So we would not consider your business to have begun at the time you started doing research. In that case, you cannot deduct any of the costs you have incurred for research.

Suppose you decide to buy enough goods for resale or equipment to start your business. We would consider this to be the starting point of your business. You can usually deduct all the expenses you incur for the business from that point on to earn income. You could still deduct the expenses even if, despite all your efforts, your business ended.

For more information about the start of a business, see Interpretation Bulletin IT-364, Commencement of Business Operations.

Statistics Canada is allowed by law to get business information collected by the Canada Revenue Agency (CRA). Statistics Canada can share the data with provincial statistical agencies to use for research and analysis purposes only. The data is related to business activities carried on in their respective province.

How to report your farming income You can earn farming income as a self-employed farmer or as a partner of a farm partnership, or both. Most of the rules that apply to self-employed farmers also apply to partners. However, if you are a partner, you should see “Reporting partnership income” on page 15.

Fiscal period Report your farming income based on a fiscal period. A fiscal period is the time between the day your farming business starts and the day it ends its business year. For an existing business, the fiscal period is usually 12 months. A fiscal period cannot be longer than 12 months. However, it can be shorter than 12 months in some cases, such as when a new business starts or when a business stops.

Self-employed individuals generally have to use a December 31 year-end. If you are an eligible individual, you may be able to use another method of reporting business income that allows you to have a fiscal period that does not end on December 31. If your fiscal year-end is not December 31, see form T1139, Reconciliation of 2019 Business Income for Tax Purposes, to calculate the amount of business income to report on your 2019 income tax return.

If you filed form T1139 with your 2018 income tax return, generally you have to file one again for 2019.

Reporting methods You can report your farming income using the cash method or the accrual method of accounting.

Cash method Note You can use the cash method of accounting for your farming activities, but must use the accrual method for separate business activities or for GST/HST/QST purposes. You must keep a separate set of records for each accounting method that you use.

When you use the cash method you must:

■ report income in the fiscal period you receive it

■ deduct expenses in the fiscal period you pay them

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For special rules, see “Prepaid expenses” on page 37.

If you use the cash method and receive a post-dated cheque as security for a debt, include the amount in income when the cheque is payable.

If you receive a post-dated cheque as an absolute payment for a debt and the cheque is payable before the debt is due, include the amount in your income on one of the following dates, whichever is earlier:

■ the date the debt is payable

■ the date you cash or deposit the cheque

Note The post-dated cheque rules apply to income producing transactions, such as the sale of grain. They do not apply to transactions involving capital property, such as the sale of a tractor.

Only farmers, fishers, and self-employed commission agents can use the cash method. All other business income must be reported using the accrual method.

When you use the cash method in a farming business, do not include inventory when you calculate your income. There are, however, two exceptions to this rule.

For more information on the cash method for farming income and the exceptions, see Income Tax Folio S4-F11-C1, Meaning of Farming and Farming Business.

For more information, see “Line 9941 – Optional inventory adjustment – current year” on page 53 and “Line 9942 – Mandatory inventory adjustment – current year” on page 53.

Accrual method When you use the accrual method you must:

■ report income in the fiscal period you earn it, no matter when you receive it

■ deduct expenses in the fiscal period you incur them, whether or not you pay them in that period

“Incur” usually means you either paid or will have to pay the expense.

For special rules, see “Prepaid expenses” on page 37.

When you calculate your income using the accrual method, the value of all inventories, such as livestock, crops, feed, and fertilizer, will form part of the calculation. Make a list of your inventory and count it at the end of your fiscal period. Keep this list as part of your business records.

You can use one of the following methods to value your inventory:

■ Value all inventory at its fair market value (FMV) (see the definition on page 54). Use either the price you would pay to replace an item or the amount you would get if you sold an item.

■ Value individual items at cost or FMV, whichever is less. You can value items by group when you cannot easily tell one item from another. Cost is the price you incur for an item, plus any expenses to get it to your business location and put in a condition of use for your business.

■ Value livestock according to the unit price base. For this method, complete form T2034, Election to Establish Inventory Unit Prices for Animals.

Use the same method you used in past years to value your inventory. The value of your inventory at the start of your 2019 fiscal period is the same as the value at the end of your 2018 fiscal period. In your first year operating a farming business, you will not have an opening inventory at the start of your fiscal period.

For more information on inventories, see Interpretation Bulletin IT-473, Inventory Valuation.

Note If you use the accrual method to calculate your farming income, calculate your cost of goods sold on a separate piece of paper.

Changing your method of reporting income If you decide to change your method of reporting income from the accrual method to the cash method, use the cash method when you file your next income tax return. Make sure you include a statement that shows each adjustment made to your income and expenses because of the difference in methods.

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If you decide to change from the cash method to the accrual method:

■ get permission from your tax services office

■ ask for this change in writing before the date you have to file your income tax return

■ explain why you want to change methods in your letter

The cash and accrual methods are different. The first time you file your income tax return using the accrual method, make sure you include a statement that shows each adjustment made to your income and expenses.

For information on how to report income and expenses for both the AgriStability and AgriInvest programs, and for tax purposes, see “Method of accounting” on page 24.

Business records You are required by law to keep records of all your transactions to be able to support your income and expense claims. A record is defined to include an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other proof containing information, whether in writing or in any other form.

Keep a record of your daily income and expenses. We do not issue record books nor suggest any type of book or set of books. There are many record books and bookkeeping systems available. You can use a book that has columns and separate pages for income and expenses.

Keep your duplicate deposit slips, bank statements, and cancelled cheques. Keep separate records for each business you run. If you want to keep computerized records, make sure they are clear and easy to read.

Note Do not send your records with your income tax return. However, do keep them in case we ask to see them at a later date.

Benefits of keeping complete and organized records You can benefit from keeping complete and organized records. For example:

■ When you earn income from many places, good records help you identify the source of income. If you keep proper records, you may be able to prove that some income is not from your business, or that it is not taxable.

■ Keeping good records will remind you of expenses you can deduct when it is time to do your income tax return.

■ Good records will keep you better informed about the past and present financial position of your business.

■ Good records can help you budget, spot trends in your business, and get loans from banks and other lenders.

■ Good records can prevent problems you may run into if we audit your income tax returns.

Consequences of not keeping adequate records If you do not keep the necessary information and you do not have any other proof, we may have to determine your income using other methods.

We may also disallow expenses you deducted if you cannot support them.

There are penalties for not keeping adequate records, for not giving the CRA access to your records when requested, and for not giving information to CRA officials when asked.

Income records Keep track of the gross income your farming business earns. Gross income is your total income before you deduct expenses, including those related to the goods sold. Your income records should show the date, amount, and source of the income. Record the income whether you received cash, property, or services. Support all income entries with original documents.

Original documents include:

■ sales invoices

■ cash register tapes

■ receipts

■ cash purchase tickets from the sale of grain

■ cheque stubs from marketing boards

■ bank deposit slips

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■ fee statements

■ contracts

Expense records Always get receipts or other vouchers when you buy something for your business. The receipts have to show all of the following:

■ the date of the purchase

■ the name and address of the seller or supplier

■ the name and address of the buyer

■ a full description of the goods or services

■ the vendor’s business number if they are a GST/HST registrant

You were asking? Q. What should I do if there is no description on a receipt?

A. When you buy something, make sure the seller describes the item. However, sometimes there is no description on the receipt, as with a cash register tape. In this case, you should write what the item is on the receipt or in your expense records.

Q. What should I do if a supplier does not want to give me a receipt?

A. When you buy something, make sure you get a receipt. Farmers must get documentation to support the transactions they enter in their books and records. Your transactions may be denied if you do not have the proper documentation to support your purchases. For more information, see guide RC4022, General Information for GST/HST Registrants.

Keep a record of the properties you bought and sold. This record should show who sold you the property, the cost, and the date you bought it. This information will help you calculate your capital cost allowance (CCA) and other amounts. Chapter 5 explains how to calculate CCA.

If you sell or trade a property, show the date you sold or traded it and the amount of the payment or credit from the sale or trade-in.

Example The following expense journal is an example of how to record your expenses for one month:

Date Particulars Cheque

No. Bank GST (5%) Purchases

Legal & Acct. Adv. Permit Repairs

Capital items

July 1 XYZ Radio 407 367.50 17.50 350.00

July 1 Smith Hardware 408 26.95 1.28 25.67

July 2 City of Ottawa 409 157.50 7.50 150.00

July 3 Andy’s Accounting

410 262.50 12.50 250.00

July 5 Wholesale Supply Inc. 411 1,836.60 87.46 1,749.14

July 5 Ed’s Used Cars 412 1,575.00 75.00 1,500.00

For more information on how to keep your business records, the time limits, and to learn more about the benefits of keeping records complete and organized, go to canada.ca/taxes-records.

Instalment payment As a self-employed farmer, you may have to pay an instalment payment. In most cases, we will send you an instalment reminder showing an instalment amount we have calculated for you.

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You can view your instalment reminders using one of the following:

■ My Account at canada.ca/my-cra-account

■ My Business Account at canada.ca/my-cra-business-account

If you earn farming income, your instalment payment is due December 31.

Note If this date falls on a Saturday, Sunday, or public holiday, you have until the next business day to make your instalment payments.

There are different methods you can use to calculate instalment payments. For example, you can use the Instalment payment calculator service at My Business Account to calculate them and view their due dates.

Go to one of the following:

■ canada.ca/my-cra-business-account, if you are a business owner

■ canada.ca/taxes-representatives, if you are an authorized representative or employee

You may have to pay interest and a penalty if you do not pay the full instalment amount owed on time.

For more information on instalment payments or instalment interest charges, go to canada.ca/taxes-instalments.

Dates to remember February 29, 2020 – If you have employees, file your 2019 T4 Summary and T4A Summary. Also, give your employees their copies of the T4 and T4A slips.

March 31, 2020 – Most farm partnerships with individuals as partners are required to file a partnership information return. However, there are exceptions, see guide T4068, Guide for the Partnership Information Return (T5013 forms).

April 30, 2020 – Pay any balance owing for 2019. Also, file your 2019 income tax return, if the expenditures of your business are mainly the cost or the capital cost of tax shelter investments.

June 15, 2020 – File your 2019 income tax return if you have self-employed farming income, or if you are the spouse or common-law partner of someone who does, unless your business expenditures are mainly the cost or the capital cost of tax shelter investments. Remember to pay any balance owing due April 30, 2020, to avoid interest charges.

September 30, 2020 – Initial (non-penalty) deadline to send your Harmonized AgriStability and AgriInvest form to the Winnipeg Tax Centre. For more information, see “Important information for AgriStability and AgriInvest” below.

December 31, 2020 – Pay your instalment payment if you meet the following conditions:

■ your main source of income in 2020 is self-employment income from farming

■ your net tax owing is more than $3,000 in each of 2018, 2019, and 2020 ($1,800 if you live in Quebec on December 31 for any of those years)

For more information on paying your income tax by instalments, go to canada.ca/taxes-instalments.

Note If any of the dates mentioned above fall on a Saturday, Sunday, or public holiday, you have until the next business day to file your return or make your payment.

Final deadline (with penalty) to send your Harmonized AgriStability and AgriInvest form to the Winnipeg Tax Centre. For more information, see “Important information for AgriStability and AgriInvest” below.

You must file your 2019 tax return reporting farming income (loss) to CRA by December 31, 2020 to be eligible for 2019 AgriStability and AgriInvest program benefits.

Important information for AgriStability and AgriInvest To participate in AgriStability, complete and send pages 1 to 7 of the harmonized form T1273 to the Winnipeg Tax Centre at the address listed in the “Where to mail your forms and return” section on page 4.

The initial deadline to submit your form without penalty is September 30, 2020. The final deadline to submit your form with penalty is December 31, 2020.

We will reduce your benefit by $500 for each month (or part of a month) you submit your form between the initial and final deadline. Forms received after December 31, 2020, are not eligible for benefits.

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You must complete a 2019 harmonized form T1273 and send it to the Winnipeg Tax Centre by December 31, 2020, if you received an AgriStability Interim Payment or a Targeted Advance Payment (or both) for the 2019 program year. If you do not, you will have to repay the money you received.

To participate in AgriInvest, complete and send pages 1 to 5 of the harmonized form T1273 to the Winnipeg Tax Centre at the address listed in the “Where to mail your forms and return” section on page 4.

The initial deadline to submit your form without penalty is September 30, 2020. The final deadline to submit your form with penalty is December 31, 2020.

We will reduce your maximum government deposit by 5% for each month (or part of a month) that you submit your form between the initial and final deadline. Forms received after December 31, 2020, will not be eligible for benefits.

If the initial or final deadlines fall on a Saturday, Sunday, or public holiday, you have until the next business day to file your form.

Employment insurance (EI) premiums As a self-employed individual you may be eligible to contribute to employment insurance (EI) for yourself. You may register to participate if you meet the eligibility criteria defined by Service Canada.

Beginning in the year you register, your EI premiums will be calculated on your income tax return for that year. If you register in 2019 to participate in this program, premiums for 2019 will be calculated on your 2019 income tax return and will be payable by April 30, 2020.

Subsequently, if you pay your income tax by instalments, EI premiums may be included in your instalment payments.

When you register for the EI program, EI premiums will be payable on your self-employment income for the entire year, regardless of the date you register. For example, whether you register in April 2019 or December 2019, you will pay EI premiums on your self-employment income for the entire 2019 year.

EI premiums are payable on the amount of your self-employment earnings up to an annual maximum amount. The annual maximum amount for 2019 is $53,100.

Claim your provincial or territorial non-refundable tax credit for the employment insurance premiums on the provincial or territorial form 428 at line 58305.

For more information, visit servicecanada.gc.ca.

Goods and services tax/harmonized sales tax (GST/HST) Generally, you must register for the GST/HST if your worldwide gross revenues from your taxable supplies of property and services (including those taxable at 0% and those of your associates) are more than $30,000 in a single calendar quarter or over four consecutive calendar quarters. Taxable supplies of property and services include those that are subject to GST/HST at the applicable rate, those that are taxed at 0% (zero-rated), and those from all your associates.

Do not include in your calculation any revenues from sales of capital property, supplies of financial services, and goodwill from the sale of a business.

For information about how the GST/HST applies to taxable farm goods and services, zero-rated farm products, and zero-rated farm purchases, see page 141.

For more general information on GST/HST, go to canada.ca/gst-hst or see guide RC4022, General Information for GST/HST Registrants. For more information about registering for GST/HST purposes, see GST/HST Memorandum 2.1, Required Registration.

The GST/HST Registry The GST/HST Registry is an online service you can use to confirm the GST/HST number of a business. You can use this registry to check if your suppliers are registered for the GST/HST when you claim an input tax credit. For more information, go to canada.ca/gst-hst-registry.

You can check the Quebec Sales Tax (QST) registration number at revenuquebec.ca/en/press-room/tax-news/details /106611/2016-09-26.

What is a partnership? A partnership is defined as the relationship that exists between persons carrying on a business in common with a view to profit. You can have a partnership without a written agreement. To help you decide if you are a partner in a certain business, determine the type and extent of your involvement in the business and check your province or territory’s laws.

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When you form, change, or dissolve a relationship that may be a partnership, consider:

■ whether the relationship is a partnership

■ the special rules about capital gains or losses and the recapture of CCA that apply when you transfer properties to a partnership

■ the special rules that apply when you dissolve a partnership

■ the special rules that apply when you dispose of your interest in a partnership

For more information about partnerships, see Income Tax Folio S4-F16-C1, What is a Partnership? or guide T4068, Guide for the Partnership Information Return (T5013 forms).

Limited partnership A limited partnership is composed of one or more general partners and one or more limited partners.

A general partner has unlimited liability for the debts and obligations of the partnership.

A limited partner generally has limited liability for the debts and obligations of the partnership unless the partner is involved in running the business.

Reporting partnership income A partnership does not file an income tax return, and is not taxed at the partnership level. All income and losses of a partnership flow through to the partners. They report their share on their income tax returns such as their T1, T2, or T3. This requirement is the same whether their share of income was received in cash or as a credit to the partner’s capital account. For more information, see guide T4068, Guide for the Partnership Information Return (T5013 forms).

Partnership losses If a partnership has a loss from carrying on business in a tax year, this loss is allocated to the partners. In general, the amount of business loss allocated to a particular partner is either netted against the partner’s income from other sources to arrive at net income for the year or is included in determining the partner’s non-capital loss for the year, as the case may be.

Note The loss carry-forward period is 20 years for non-capital losses, farm losses, restricted farm losses, and life insurer’s Canadian life investment losses incurred.

Filing requirements for partnerships Under subsection 229(1) of the Regulations, all partnerships that carry on business in Canada or are Canadian partnerships or specified investment flow-through (SIFT) partnerships must file a partnership return. However, under CRA administrative policy, certain partnerships that carry on business in Canada or are Canadian partnerships are not required to file a partnership return.

For more information about the partnership information return and any other filing exemptions, see guide T4068, Guide for the Partnership Information Return (T5013 forms).

When you receive your T5013 slip, or a partnership financial statement, you must complete a form T1273 or T1274 in the manner described in Chapter 3. Use a separate form T1274 to deduct any business expense you incurred for which the partnership did not repay you. For more information, see “Additional expenses (partnerships)” on page 19.

Once form T1273 is completed, enter the gross income from form T1273 (or total gross income from form T1273 plus any gross income from form T1274) on line 14099 of your income tax return. Enter your share of the net income from page 5 of form T1273 (or total of your share of the net income from form T1273 plus your share of any net income from form T1274) on line 14100. Attach copy 2 of your T5013 slip to your return.

Capital cost allowance (CCA) A partnership can own depreciable property and claim CCA on it. However, individual partners cannot claim CCA on property the partnership owns.

From the capital cost of depreciable property, subtract any investment tax credit allocated to the individual partners. We consider this allocation to be made at the end of the partnership’s fiscal period. You must also reduce the capital cost by any type of government assistance received. Box 040 of your T5013 slip, Statement of Partnership Income, shows the amount of CCA the partnership claimed on your behalf. This amount has already been deducted from your business income in box 116 of the T5013 slip. Do not deduct this amount again.

For more information on CCA and the adjustments to capital cost, see Chapter 5.

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Any recapture of CCA or terminal loss on the sale of a partnership’s depreciable property is included in the partnership’s income or loss for the year that is allocated to the partners. Any taxable capital gain on the sale of a partnership’s depreciable property is also allocated to the partners.

For more information about capital gains and losses, as well as recapture and terminal losses, see Chapter 5.

GST/HST rebate for partners If you are an individual who is a member of a partnership, you may be able to get a rebate for the GST/HST you paid on certain expenses. The rebate is based on the GST/HST you paid on expenses you deducted from your share of the partnership income on your income tax return. However, special rules apply if your partnership paid you an allowance for those expenses. For more information, go to canada.ca/cra-gst-hst-rebates and click on “Employee and partner.”

As an individual who is a member of a partnership, you may qualify for the GST/HST partner rebate if you meet all of the following conditions:

■ the partnership is a GST/HST registrant

■ you personally paid GST/HST on expenses that:

– you did not incur on behalf of the partnership

– you deducted from your share of the partnership income on your income tax return

However, special rules apply if the partnership reimbursed you these costs.

Examples of expenses subject to the GST/HST are vehicle costs and certain business-use-of-home-expenses. The rebate may also apply to the GST/HST you paid on motor vehicles, and aircraft, for which you deducted CCA.

The eligible part of the CCA is the part that you deduct on your tax return in the tax year that relates specifically to a motor vehicle or equipment on which you paid GST/HST. It would also be eligible for the rebate, to the extent that the partnership used the property to make taxable supplies.

You can also get a GST/HST rebate calculated on the CCA you claimed on certain types of property. For example, you can generally claim the rebate based on the CCA you deducted for a vehicle you bought to earn partnership income if you paid GST/HST when you bought it.

If you deduct CCA on more than one property of the same class, separate the part of the CCA of the property that qualifies for the rebate from the CCA on the other property. If any part of the rebate relates to the CCA deduction for a motor vehicle, or equipment, you have to reduce the undepreciated capital cost (UCC) of that property by the amount that is part of the rebate.

Complete form GST370, Employee and Partner GST/HST Rebate Application, to claim your GST/HST rebate for partners. You have to include this rebate in your income for the tax year in which you receive it.

For example, if in 2019 you receive a GST/HST rebate for the 2018 tax year, you have to include the amount of the rebate on your Income Tax and Benefit Return for 2019:

■ enter, as an expense, at line 9974 of form T1273 or T1274 the GST/HST rebate amount for partners that pertains to eligible expenses other than the CCA

■ in column 2 of “Area A – Calculation of CCA claim,” reduce the UCC for the beginning of 2019 by the rebate part that relates to the eligible CCA

For more information about the GST/HST rebate, go to our webpage “GST/HST rebate for employees and partners.”

Investment tax credit (ITC) An investment tax credit (ITC) lets you subtract part of the cost of some types of property you acquired or expenditures you incurred from the taxes you owe. You may be able to claim this tax credit in 2019 if you:

■ acquired qualifying property

■ incurred qualifying expenditures

■ were allocated renounced Canadian exploration expenses

■ acquired monies paid to agricultural organizations through check-offs, levies or cash assistance

You may also be able to claim this tax credit in 2019 if you have unused ITCs from previous years. For more information about ITCs, see form T2038(IND), Investment Tax Credit (Individuals).

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Scientific research and experimental development (SR&ED) You can receive scientific research and experimental development (SR&ED) ITCs on qualified expenditures. You can receive them in the form of a cash refund or a reduction of tax payable or both. Unused SR&ED ITCs can be carried back 3 years or carried forward 20 years.

Note Agricultural producers can access ITCs earned on contributions made to agricultural organizations that fund SR&ED. For more information, see Chapter 8 of the Third-Party Payments Policy on the CRA website.

For more information about ITCs and to claim them, see form T2038(IND), Investment Tax Credit (Individuals).

Chapter 2 – Your AgriStability and AgriInvest programs

Participating in the programs You can choose to participate in AgriStability only, AgriInvest only, or both programs together, depending on the business risk management needs of your farm.

As a program participant, you are responsible for knowing program deadlines and understanding program policies. For more information, see the program handbooks or visit the program websites.

AgriStability AgriStability is a voluntary program that provides support when you experience larger income losses.

Are you eligible? To participate in AgriStability for the 2019 program year, you must:

■ file a form T1273

■ file a 2019 Canadian income tax return reporting eligible farming business income (loss) by December 31, 2020, (except Status Indians farming on a reserve in Canada who are exempt from filing an income tax return)

■ meet all program requirements by the deadlines

In addition, you must have:

■ enrolled in the program and paid your fee by the deadline shown on your Enrolment Notice

■ completed a minimum of six consecutive months of farming activity

■ completed a production cycle (for example, growing and harvesting a crop or rearing livestock)

We may waive the requirements to complete six consecutive months of farming activity and a production cycle if you experienced a disaster.

If you are a Status Indian farming on a reserve in Canada and you are not required to file an income tax return, contact your Administration for a copy of the form and guide you need to complete.

For more information on eligibility, see your program handbook or visit the program websites.

How to participate Complete and send pages 1 to 7 of your form T1273 by the deadline. For information on program deadlines, see page 13.

AgriStability benefit calculations AgriStability is based on margins.

Program margin – your allowable income minus your allowable expenses adjusted for changes in purchased inputs, receivables, payables, and inventory.

Reference margin – an average of your program margins for the past five years with adjustments made to reflect significant changes to the size or structure of your farm. We drop the highest and lowest years and average the remaining years.

Reference margin limit – is the lower of your reference margin or your average allowable expenses for the three years used to calculate your reference margin.

Your reference margin limit cannot reduce your reference margin by more than 30%. This ensures you have support for at least 70% of your reference margin. If your limit reduces your margin by more than 30%, we apply the higher amount.

Generally, you will receive an AgriStability payment when your program margin in the current year falls more than 30% below your applied reference margin. AgriStability covers 70% of your decline that is beyond the 30%.

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Reference margins will be calculated for 2019 as follows:

■ If you participated in the program in any of the past four years, we will calculate your reference margin using the program margins for the previous five years. The highest and lowest program margins are dropped and the remaining three are averaged. This is called an Olympic average.

■ If you did not participate in the program in the past four years, we will calculate your reference margin using an average of the three previous program margins. We will continue to calculate your reference margin using three previous program margins until you have five years of historical information on file.

■ If you did not have farming activity in one or more of the five previous years, your reference margin will be calculated using an average of the three previous years. If you did not have farming activity in any of the three previous years, we will create margins for any missing years using industry averages.

For more information on margins and how we calculate AgriStability payments, see your program handbook or visit the program website.

We will send you a Calculation of Program Benefits after we process your form, to show you how we calculated your benefit.

AgriStability program fee You must pay an annual fee to participate in AgriStability. The fee is $3.15 for every $1,000 of contribution reference margin protected (based on coverage of 70% of your margin). The minimum fee is $45.

For more information on program fees and participation rules, see your Enrolment Notice or your program handbook.

AgriStability administrative cost share (ACS) You must pay $55 each year for administration costs.

To participate in AgriStability, you must pay your fee and ACS by the deadline. You can:

■ pay electronically through your financial institution (contact them to see if they offer this service)

■ send your cheque direct to your Administration

For more information, contact your Administration.

Note The electronic payment is not available for producers in British Columbia.

Do not send payments for the AgriStability or AgriInvest programs with your income tax return. The CRA will credit any payments you include with your income tax return to your income tax account.

AgriInvest AgriInvest is a voluntary program that provides you with a self-managed producer-government savings account.

Each year you can deposit money into an AgriInvest account and receive matching government contributions. You can withdraw the money when you need it.

Are you eligible? To participate in AgriInvest for the 2019 program year, you must:

■ file a form T1273

■ file a 2019 Canadian income tax return reporting eligible farming business income (loss) by December 31, 2020

■ meet all program requirements by the deadlines

If you are a Status Indian farming on a reserve in Canada and you are not required to file an income tax return, contact your Administration for a copy of the form and guide you need to complete.

For more information on eligibility, see the AgriInvest Program Handbook or go to agr.gc.ca/agriinvest.

How to participate Complete and send pages 1 to 5 of your form T1273 by the deadline. For information on program deadlines, see page 13.

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AgriInvest benefit calculations AgriInvest deposits are based on a percentage of your Allowable Net Sales. Allowable Net Sales are your total allowable commodity sales and program payments minus your total allowable commodity purchases and repayment of program benefits.

Once we process your form, we will send you a Deposit Notice showing your deposit options.

Form T1273, Statement A – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Individuals As a self-employed farmer, you have to give us a statement that accurately shows your farming activities for the year. Use form T1273 to report your income and expenses for income tax purposes and to report your farming information for AgriStability and AgriInvest. To get this form, go to canada.ca/cra-forms.

Deceased participant If a deceased individual had farming income or losses, complete form T1273 in the name of the deceased individual. Print “Estate” in the name area. Use the income and expenses that you are reporting on the individual’s final income tax return for 2019.

Send copies of the individual’s death certificate and the probated will (or letters of administration) to the CRA with the final income tax return and to your AgriStability and AgriInvest Administration.

If you also file an optional return for the year of death, such as a return of rights and things, contact your Administration to get the correct form to provide this information to your Administration.

Prepare an additional form T1273 in the name of the surviving spouse or common-law partner if a beneficiary continues the farming business. Contact your Administration to get the correct form if a trust has been established for the surviving spouse or common-law partner. Use the income and expenses from the surviving spouse’s or common-law partner’s 2019 income tax return. For more information about applying as a trust, contact your Administration.

Form T1274, Statement B – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations You may have more than one farming operation. For example, you could have a sole proprietorship and be a partner in a partnership. If you have more than one farming operation, complete form T1273 for one operation and a separate form T1274 for each additional operation. To get these forms, go to canada.ca/cra-forms.

Additional expenses (partnerships) Complete form T1274 if you have reported a partnership operation on form T1273 and you want to deduct additional expenses for which the partnership did not reimburse you. For example, you may want to deduct the farming business part of allowable motor vehicle expenses or business-use-of-home expenses.

If you are using form T1274 to deduct business-use-of-home expenses, follow these steps:

■ leave the income areas of page 1 blank

■ report your expenses on the appropriate lines of page 2

■ enter the total expense from page 2 to line 9968 of page 3

■ do not fill in the “Partnership information” area of page 3

■ do not make an entry on “Line 9934 – Adjustment to business-use-of-home expenses”

■ complete form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses

The amount you claim reduces your net income from farming on line 14100 of your income tax return. However, you cannot use business-use-of-home expenses to create or increase a loss from farming.

Note The instructions in the note in the “Business-use-of-home expenses” section of form T1175 do not apply if you are only claiming business-use-of-home expenses.

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Completing the forms By completing form T1273 and form T1274, you authorize:

■ the CRA to share information from your income tax return with Agriculture and Agri-Food Canada (AAFC)

■ Agriculture and Agri-Food Canada to share the information from your form and any additional information that you provide with:

– provincial and territorial ministers of agriculture

– administrators of other federal or provincial farm programs

The information is used for:

■ audit

■ analysis

■ evaluation

■ special assistance payments

For more information, see “Confidential information and participant consent” on page 2 of form T1273.

The Privacy Act gives you the right to access your personal information held by the Government of Canada and make any corrections to your information.

If you want to access or correct your personal information, contact the Access to Information and Privacy Coordinator at:

Access to Information and Privacy Office Agriculture and Agri-Food Canada 1341 Baseline Road Ottawa ON K1A 0C5 Telephone: 613-773-0970 Fax: 613-773-1380 Email: aafc.atip-aiprp.aac@canada.ca

For general inquiries on privacy of personal information, contact the Office of the Privacy Commissioner (OPC) at:

Office of the Privacy Commissioner of Canada 30 Victoria Street Gatineau QC K1A 1H3 Toll-free telephone: 1-800-282-1376 Telephone: 819-994-5444 TTY: 819-994-6591 Website: priv.gc.ca

If you have a complaint under the Privacy Act, contact the Office of the Privacy Commissioner.

Adjustments Use form T1275 to either:

■ send additional information about your farm to your Administration

■ adjust your AgriStability and AgriInvest form information

If you farm in Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, or the Yukon, send this form and any attachments to the federal Administration at the address listed in the “Federal Administration contact information” section on page 3.

If you farm in British Columbia, send this form and any attachments to either:

■ both the federal Administration and your provincial Administration for information affecting AgriInvest (pages 1 to 5 of form T1273 and pages 1 to 3 of form T1274)

■ your provincial Administration only for information affecting AgriStability (page 7 of form T1273 and page 5 of form T1274)

For adjustments that affect your net income, send form T1-ADJ, T1 Adjustment Request to the CRA.

The following text explains how to complete form T1273.

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Participant information Participant identification Enter your first and last name.

Enter your Participant Identification Number (PIN). You can find your PIN on either your:

■ AgriStability Enrolment Notice

■ AgriInvest Deposit Notice

If you cannot find your PIN, contact your Administration.

Enter your social insurance number (SIN).

Enter your business number (BN). If you cannot find your BN, contact the CRA.

Enter your telephone and fax numbers (if applicable).

Enter your email address (if applicable).

Farming information Province/Territory of main farmstead Enter the province or territory where you earned most or all of your gross farming income over the previous five years.

For more information on province of main farmstead and multi-jurisdiction farms, contact your Administration or visit the program websites.

Number of years farmed Enter the number of years you have farmed.

Final year of farming Answer “Yes” if 2019 was your final year of farming.

Industry code Enter the industry code that best describes your activity.

If more than 50% of your business involved one specific activity, choose the code that identifies that main activity. However, if your business is involved in more than one type of economic activity, and none of the codes make up more than 50% of your business, choose the appropriate level of code from the list.

When you are filing your return electronically, you have to use the industry codes available from your tax preparation software.

The industry codes listed in this guide are from the latest version of the North American Industry Classification System (NAICS) Canada.

There are thousands of NAICS codes. The following are examples of codes for farming operations.

Livestock farm 112110 Beef cattle ranching and farming, including feedlots

112120 Dairy cattle and milk production

112210 Hog and pig farming

112310 Chicken egg production

112320 Broiler and other meat type chicken production

112330 Turkey production

112340 Poultry hatcheries

112391 Combination poultry and egg production

112399 All other poultry production

112410 Sheep farming

112420 Goat farming

112510 Aquaculture

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112991 Animal combination farming

115210 Support activities for animal production

Other animal specialties farm 112910 Apiculture

112920 Horses and other equine production

112930 Fur bearing animal and rabbit production

112999 All other miscellaneous animal production

Field crop farm 111110 Soybean farming

111120 Oilseed (except soybean) farming

111130 Dry pea and bean farming

111140 Wheat farming

111150 Corn farming

111190 Other grain farming

111211 Potato farming

111219 Other vegetables (except potato) and melon farming

111330 Non-citrus fruit and tree nut farming

111411 Mushroom production

111419 Other food crops grown under cover

111421 Nursery and tree production

111422 Floriculture production

111910 Tobacco farming

111940 Hay farming

111993 Fruit and vegetable combination farming

111994 Maple syrup and products production

111999 All other miscellaneous crop farming

115110 Support activities for crop production

Production cycle Answer “Yes” or “No” to show if you have completed a production cycle on at least one of the commodities you produced.

You must have completed a production cycle to be eligible for AgriStability. We may waive this condition if you experienced a disaster.

A production cycle includes at least one of the following:

■ growing and harvesting a crop

■ rearing livestock

■ buying and selling livestock within a program year for feeding or finishing enterprises

You do not need to complete a production cycle to be eligible for AgriInvest.

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Contact person information Fill in this area if you give permission to someone else (such as your spouse, common-law partner, or accountant) to provide or ask for more information about your AgriStability and AgriInvest form. We will call your contact person if we have a question. We will send correspondence to both you and your contact person.

Your contact person can:

■ ask us questions about your account

■ send us information or request adjustments to your information

■ ask for copies of letters or statements we sent to you

Your contact person cannot:

■ change your address

■ change your direct deposit information for AgriStability

■ ask for an account transfer form for AgriInvest

Tick the box if you have a contact person.

Enter the first and last name of your contact person, their business name (if applicable), address, and telephone and fax numbers.

Answer “Yes” if you want a copy of your Calculation of Program Benefits mailed to your contact person.

If you leave this area blank, we will contact you directly if we have a question.

Federal public office holder or employee of Agriculture and Agri-Food Canada (AAFC) If you or anyone involved in completing this form is a current or former federal public office holder or employee of AAFC, answer “Yes” to this question. If you are a partner in a partnership and at least one of your partners is a current or former federal public office holder or employee of AAFC, answer “Yes.”

Other farming information Location of main farmstead See the list of provincial jurisdictions (for example, rural municipalities, counties, districts) in the “Regional code list” on page 133 of this guide.

You do not have to fill in this section if you farm in Newfoundland and Labrador.

Combined operations AgriStability is a whole farm program. That means we may combine your farm with another farm even if the operations report separately for income tax.

Combining ensures that AgriStability benefits are paid to farms that had decreases in income for reasons beyond their control, not because of business or tax planning decisions.

Generally, you should answer “Yes” to this question if one of the following applies:

■ your farm is legally, financially, or operationally dependent on another farming operation

■ all or some of the transactions between the farms are not at fair market value

■ the farms share the same land or equipment

Individuals in a partnership do not need to be combined.

If your farm has a change in combined operations, enter the operation PIN and tick “Add” or “Remove.”

For more information on combining, see your program handbook or visit the program website.

Note We need the information from all the combined farms before we can process your form.

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Identification In the following sections of the form, only provide information about your main farming operation (Operation #1). Complete form T1274 for each additional farming operation you have. Number each operation in the box at the top right-hand corner of each page.

Tick the “Sole proprietorship” or “Partnership” box.

Fiscal period Enter the fiscal period for your operation. Report the beginning and end of the farm’s business year by the year, month, and day. Your farm’s 2019 fiscal period must end in the 2019 tax year.

Method of accounting Use the same method of reporting (cash or accrual) for program purposes as you use for income tax. Enter either:

■ code 1 for accrual method

■ code 2 for cash method

Was your farm involved in any of the following? Tick the applicable box(es) if your farm was:

■ a member of a feeder association

■ in a crop share arrangement as either a landlord or a tenant

For your main farming operation (Operation #1), enter this information on form T1273. For your other operations, enter this information on form T1274.

Chapter 3 – Calculating your farming income or loss These sections of the form are used to calculate your Allowable Net Sales for AgriInvest. Allowable Net Sales are allowable commodity sales and program payments, less allowable purchases. For more information on Allowable Net Sales and how we calculate benefits under AgriInvest, see the AgriInvest Program Handbook or go to agr.gc.ca/agriinvest.

We also use these sections to calculate the cash portion of your program year margin for AgriStability. For more information on how we calculate AgriStability margins, see your program handbook or visit the program website.

Complete form T1273 for your main farming operation. If you have more than one farming operation, use form T1274 for each additional operation. Instructions in this chapter apply to both forms.

To make sure you report your information correctly for AgriStability and AgriInvest, read the following instructions carefully.

Commodity and Program payment code lists Use the Commodity and Program payment code lists found at the back of this guide to report all income and expenses on form T1273 or T1274. Codes may change from year to year. Check the lists to make sure you use the right code.

If you use the accrual method of accounting, report all your sales and your changes in opening and closing commodity inventories separately using the code for the commodity to report both entries.

Income An agricultural commodity is a plant or an animal produced in a farming business.

Some commodities that may be considered farming income for income tax purposes are not allowable for AgriStability and AgriInvest including:

■ aquaculture

■ trees and seedlings sold for use in reforestation

■ wood sales

■ peat moss

■ wild game reserves

■ cannabis (except for industrial hemp)

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Where permitted by law, hunt farms (not wild game reserves) are eligible. For information on how to apply if you operate a hunt farm, contact your Administration.

If you do not produce any allowable commodities on your farm, use form T2042 to report your farming income from non-allowable commodities to the CRA.

If you produce both allowable and non-allowable commodities on your farm, report the income from:

■ Non-allowable commodities on line 9600, except for woodlots or cannabis (excluding industrial hemp). Report woodlot sales using code 259 and cannabis using code 382.

■ Allowable commodities on the “Commodity sales and program payments” section of the form. Use the codes at the back of this guide. Report allowable commodity sales based on the point of sale conditions outlined further on page 25.

Sales and purchases of supply managed commodities are not allowable for AgriInvest. You must produce allowable commodities in addition to your supply managed commodities to participate in AgriInvest. Enter both your supply managed and non-supply managed commodities on the “Commodity sales and program payments” section of the form. Use the codes found at the back of this guide.

If you have questions about whether a commodity you produce is allowable for AgriStability and AgriInvest, call 1-866-367-8506.

Farming activities outside Canada If you produce a commodity in Canada, then ship it outside of the country for further production, the income and expenses generated once the commodity leaves Canada are non-allowable for AgriStability and AgriInvest.

When shipping commodities outside Canada for further production, include the fair market value (FMV) of the commodity at the point it leaves Canada as allowable income using the code for the commodity.

If the commodity is returned to Canada for further production or sale, include the FMV of the commodity at the point it enters Canada as an allowable purchase using the code for the commodity.

If you purchase livestock, you must have made an appreciable contribution to the growth or its increase in value in Canada for the income and expenses to be considered allowable. For AgriStability, commodities reported in the “Livestock inventory valuation” and the “Livestock productive capacity” sections of the form should reflect the allowable production that occurred in Canada only.

Point of sale AgriInvest benefits are based on Allowable Net Sales, so you have to determine when the sale occurs. For AgriInvest, the point of sale for your allowable commodity is determined by the following conditions:

■ you produce it on your farm

■ it is separate and identifiable from other producers’ commodities

■ you bear full risk for it

■ you have a separate billing or accounting transaction that shows the sale value and any deductions from that value

The point of sale is when you:

■ can no longer identify your commodity as your own

■ are no longer at risk for the value of the commodity

If your commodity sales meet these point of sale conditions, fill in the code, name, and gross sale amount of each commodity on the form.

Example You have potato sales of $50,000, you fill in:

147 potatoes $50,000

If you received a cheque for a commodity sale that is net of expenses, report the sale to include the full value of the commodity.

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Example Your receipt from the processor shows:

$10,000 gross apple sales – $1,500 pack-and-sell costs $8,500 net sales

Enter $10,000 as your gross apple sales, and $1,500 as an expense on “Line 9836 – Commissions and levies.”

If your commodity sales include charges that were applied after the point of sale, adjust your sales to show the value of the commodity at the point of sale. Enter any amounts charged after the point of sale on “Line 575 – Point of sale adjustments.” This will ensure that we calculate your Allowable Net Sales correctly.

Example Your cash ticket from the elevator shows:

$7,000 gross wheat sales – $1,500 freight charges – $300 elevation charges $5,200 net sales

Enter the gross wheat sales of $7,000 as income. Enter the freight charges of $1,500 and the elevation charges of $300 as a point of sale adjustment on line 575, under “Commodity purchases and repayment of program benefits” (not under “Allowable expenses”). You enter these charges on line 575 because you incurred these expenses after you delivered your grain to the elevator (for example after the point of sale).

Payment in kind A payment in kind occurs when you receive or give goods or services instead of money. For instance, to pay someone for a business expense, you may give them something you produced on your farm instead of money. When you do this, include the fair market value (FMV) of the goods or services in income. Use the appropriate code for the commodity. Enter the same amount as an expense.

If you received a payment in kind for a product you would normally have sold, include the FMV of the product in income.

If you were a landlord renting out land involved in sharecropping, we consider any payment in kind you received to be rental income.

Example You owe your landlord $1,000 for rent. Instead of cash, you pay him by giving him $1,000 worth of seed. Enter the fair market value of the seed crops ($1,000) that you gave the landlord as a commodity sale. Enter the $1,000 on line 9811 as a rental expense.

Gifts In your income, include the FMV of livestock or other items you gave that you would normally have sold.

Once you give the livestock or other items away, you cannot deduct any more costs for raising or maintaining them.

Crop share If you are a tenant in a crop share, you are eligible to apply for AgriStability and AgriInvest.

If you are a landlord in a crop share, you are eligible for AgriStability and AgriInvest only if the crop share arrangement is considered a joint venture.

For AgriStability, your crop share arrangement is considered a joint venture if your share of the allowable expenses reported to the CRA is reasonable for your share of the allowable income.

For AgriInvest, your crop share arrangement is considered a joint venture if your share of allowable purchases reported to the CRA is reasonable for your share of the allowable income.

Eligible tenants and landlords report only their individual share of the allowable income and expenses.

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Example 1 You are a tenant in a crop share and receive 60% of the income from the sale of your crop. Enter only your 60% share of the sales under “Commodity sales and program payments.” Enter your 60% share of expenses under “Allowable expenses.”

Example 2 You are an eligible landlord who receives 40% of the income from the sale of the crop. Enter only your 40% share of the sales under “Commodity sales and program payments.” Enter your 40% share of expenses under “Allowable expenses.”

Commodity futures You can report income from commodity futures as a commodity sale for AgriStability and AgriInvest purposes if the income is both:

■ from a primary agricultural product that you produced on your farm

■ considered a hedging strategy

Report the gross income earned from the futures transaction as a commodity sale using the code for the commodity. Report related purchases as a commodity purchase using the code for the commodity.

Report income from futures transactions involving commodities that you did not produce or that were not considered a hedging strategy as other farming income on line 9600. Enter losses as a non-allowable expense on line 9896.

Grains, oilseeds, and special crops If you sold grain directly or through an agency, include in income all the amounts you received from these sales.

Storage and cash purchase tickets When you delivered grain to a licensed public elevator or process elevator, you received a storage ticket, a cash purchase ticket, or a deferred cash purchase ticket.

If you received a storage ticket, a sale did not take place. Therefore, you do not have to include that amount in income.

However, if you received a cash purchase ticket, a sale did take place. Since we consider that you received a payment at the time you received the ticket, you must include the amount in income.

If you received a deferred cash purchase ticket, you may be able to defer the income until a later fiscal period. You can do this if the ticket provides for payment after the end of the year in which you delivered the grain. This carryover of income is only allowable in specific situations. For more information, see Interpretation Bulletin IT-184, Deferred cash purchase tickets issued for grain.

Cash advances Under the Agricultural Marketing Programs Act, you may be able to get advances for crops that someone stores in your name. We consider these advances to be loans. Do not include these payments in your income if you have not sold the crops. Include the full amount from the sale of your crops in your income for the tax year in which the sale occurs.

Tree production Allowable tree production Trees must be produced through farming activity to be allowable for AgriStability and AgriInvest. Farming activity for trees includes:

■ planting

■ nurturing

■ harvesting

Operations must:

■ pay significant attention to managing the growth, health, and quality of the trees

■ generate normal input and harvesting costs

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Allowable tree production includes regular seeding and harvesting of:

■ trees

■ shrubs

■ herbaceous perennials

■ annuals, including ornamental, fruit, and Christmas trees

Report income, expenses, and inventory of allowable tree production using the code for the commodity.

Non-allowable tree production Trees produced or harvested for the following reasons are non-allowable for AgriStability and AgriInvest:

■ firewood

■ construction material

■ poles or posts

■ fibre, pulp and paper

■ trees and seedlings destined for use in reforestation

Enter income from these non-allowable items on “Line 9600 – Other (specify).”

Wood sales (including stumpage) If you operated or regularly harvested a woodlot, use commodity code 259 to report the sale of trees, lumber, logs, poles, or firewood in your income. This income is non-allowable for AgriStability and AgriInvest.

From this income, you can deduct a type of capital cost allowance known as a depletion allowance. For more information, see Interpretation Bulletin IT-481, Timber Resource Property and Timber Limits.

If you earned the income by letting other people remove standing timber from your woodlot, the proceeds may be a capital receipt. A taxable capital gain or an allowable capital loss may result. For more information on capital gains and losses, see Chapter 8 and guide T4037, Capital Gains.

For more information on the sale of wood, see Income Tax Folio S4-F11-C1, Meaning of Farming and Farming Business.

Livestock Include insurance payments you received for loss of livestock in the commodity sales column using the livestock commodity code.

Custom feedlot operators For AgriStability, income and expenses may be allowable if you:

■ grew (or purchased) the feed used in your custom feeding operation

■ made an appreciable contribution to the growth and maturity of the livestock

For AgriInvest, income you earned from custom feeding is allowable based on the value of allowable commodities you grew (or purchased) and fed to custom fed livestock.

If your custom feeding invoices are itemized, enter:

■ allowable feed and protein supplements as a prepared feed sale under “Commodity sales and program payments” using code 243

■ other itemized charges under “Commodity sales and program payments” using code 576

If your custom feeding invoices are not itemized, enter:

■ the amount invoiced as a prepared feed sale under “Commodity sales and program payments” using code 246. We will use 70% of this amount to calculate your Allowable Net Sales.

PMU contract cancellation income Income you received from the buy-out of pregnant mare urine (PMU) contracts is allowable if paid in lieu of the income you would have received for the sale of the product under the contract. Penalty fees and other compensation are non-allowable.

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Use code 322 to report amounts you received for your Collection Agreement, Herd and Health payments, West Nile Reimbursement, and Equine Placement Fund.

Use “Line 9600 – Other (specify)” to report amounts you received for Business Planning Subsidy and capital costs.

Canadian Food Inspection Agency (CFIA) – Destroying livestock You have to include in income any payments you received under the Health of Animals Act for destroying animals.

Use the CFIA program payment codes to report CFIA payments you received. For more information on how to report your CFIA payments, see “Income from program payments” on page 31.

You can choose to deduct all or part of the payment as an expense in the year. However, if you choose to do this, you have to include in your income for your next fiscal period the amount you deduct in your 2019 fiscal period. If you deferred payments in your 2018 fiscal period, you have to include the deferred amounts as income in your 2019 fiscal period. Use the codes found in the “PDR/PFR/CFIA deferred livestock codes” chart on page 31 to report these amounts.

Prescribed drought region (PDR) and Prescribed flood region (PFR) The Livestock Tax Deferral provision allows you to sell part of your breeding herd due to drought or flooding in a prescribed drought or flood area. You would be permitted to defer a portion of your sales proceeds to the following fiscal period or a later year if the condition persists and your region is still a prescribed region.

To be able to do this, you must meet the following two conditions:

■ your farming business was located in a PDR or PFR at some time during your 2019 fiscal period

■ you reduced, by sale or other means, the number of breeding animals in your breeding herds by at least 15%

For a list of the prescribed regions of drought, flood or excessive moisture, contact the CRA or Agriculture and Agri-Food Canada or visit canada.ca and search for “Drought Watch” or “Livestock Tax Deferral Provision.”

Income deferral The following animals kept for breeding that are over 12 months of age are considered breeding animals eligible for the income deferral:

■ bovine cattle

■ bison

■ goats

■ sheep

■ deer, elk, and other similar grazing ungulates

■ horses you breed to produce pregnant mare’s urine that you sell

Eligibility for the income deferral includes:

■ all horses over 12 months of age kept for breeding

■ breeding bees not used mainly to pollinate plants in greenhouses and larvae of such bees. For the purposes of the income deferral rule, breeding bee stock is defined as follows:

– at any time, a reasonable estimate of the quantity of your breeding bees held at that time in the course of carrying on a farming business using a unit of measurement that is accepted as an industry standard

The unit of measurement at the end of the year is the same as that used for the beginning of the year. A formula is used to calculate what you can defer for breeding bees.

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To determine the size of your breeding herd at the end of your 2019 fiscal period, fill in the following chart.

Breeding herd chart

Part 1

How many of your female bovine cattle over 12 months of age held at the end of your 2019 fiscal period have given birth? 1

How many of your female bovine cattle over 12 months of age held at the end of your 2019 fiscal period have never given birth? 2

Enter one half of the amount from line 1 3

Enter either the amount from line 2 or line 3, whichever is less 4

Part 2

How many breeding animals did you have at the end of your 2019 fiscal period? 5

Enter the amount from line 2 6

Enter the amount from line 4 7

Line 6 minus line 7 8

Number of breeding animals in your breeding herd at the end of your 2019 fiscal period: line 5 minus line 8 9

If the amount from line 9 is not more than 85% of the total number of animals in your breeding herd at the end of your 2018 fiscal period, you can defer part of the income received in 2019 from the sale of breeding animals.

Before you determine how much you can defer, you need to calculate a few amounts. First, determine your sales of breeding animals for your 2019 fiscal period minus any reserves you claimed for these sales.

A reserve is created when you sell property and do not receive the full proceeds at the time of the sale. Instead, the amount of proceeds is spread over a number of years, which allows you to defer reporting these proceeds to the year in which you receive them. For more information on reserves, see Interpretation Bulletin IT-154, Special reserves.

When you have determined your sales of breeding animals, subtract from this amount the cost of breeding animals you bought in your 2019 fiscal period. The result is your net sales amount.

You then determine how much you can defer as follows:

■ if the amount at line 9 is more than 70% and not more than 85% of your breeding herd at the end of your 2018 fiscal period, you can defer up to 30% of your net sales amount

■ if the amount at line 9 is between 0% and 70% of your breeding herd at the end of your 2018 fiscal period, you can defer up to 90% of your net sales amount

You do not have to defer all of this income. You can include any part of it in your 2019 income. However, the deferred income must be reported in the fiscal period that ends in either:

■ the year beginning after the period or periods when the region stops being a PDR or PFR

■ the year when the farmer dies

■ the first year when, at the end of that year, the farmer is a non-resident and has ceased to carry on business through a fixed place of business in Canada

If you want, you can elect to report the deferred income in the year after you deferred it.

Report the income you received from the sale of breeding animals as a commodity sale using the commodity code (see “Commodity list” on page 104). Report the amount you are deferring as a purchase using one of the deferred livestock codes listed below.

In the year that you must report the deferred income, report it under commodity sales using the same deferred livestock code you used before.

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PDR/PFR/CFIA deferred livestock codes

Deferred bovine cattle 150

Deferred bison 151

Deferred goat 152

Deferred sheep 153

Deferred deer 154

Deferred elk 155

Deferred horse for PMU sales 156

Deferred other breeding animals 157

If your farming business was not in a PDR or PFR at any time during your 2019 fiscal period, you cannot defer the amount you received when you sold breeding animals. Also, you must include in your 2019 income any unreported amounts you deferred in earlier years.

However, as long as your farming business was in a PDR or PFR at any time in your 2019 fiscal period, you do not have to include income you deferred in earlier years.

Income earned from the use of commodities Include income earned from the use of commodities with commodity sales, except for pollination services. For example, report income from stud fees with horse sales. However, enter income earned from pollination services using code 376.

Private insurance proceeds for allowable commodities Use code 661 to enter proceeds you received from private insurance for revenue losses for allowable commodities.

For example, enter proceeds you received from Global Ag Risk for production losses of allowable commodities using this code.

Insurance proceeds for allowable expense items Use code 406 to enter insurance proceeds you received for allowable expense items, such as fertilizers, chemicals, fuel, or twine.

Income from program payments For AgriInvest, only payments received for the loss of an allowable commodity are included in your Allowable Net Sales. For example:

■ AgriInsurance (production/crop/hail insurance)

■ private insurance for allowable commodities

■ wildlife damage compensation

For AgriStability, only payments that compensate you for losses covered under AgriStability are included in your program year margin.

Use the codes found in the Program payment list A or B to report your program payment. Enter the program payment code, name, and amount under “Commodity sales and program payments.” Find the Program payment lists beginning on page 107.

If you recorded program payments net of expenses in your books (for example, income minus expenses), report the full amount of the payment as income and the deductions as an expense.

Example $6,000 hail insurance proceeds – $2,000 premiums $4,000 net proceeds

Enter $6,000 as a program payment using code 401, “AgriInsurance/crop/production or hail insurance – Grains, oilseeds, and special crops.”

Enter $2,000 as an allowable expense, on “Line 9665 – Insurance premiums (crop or production).”

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You should receive an AGR-1 slip, Statement of Farm-Support Payments, identifying all 2019 taxable farm-support program payments from which you received more than $100. These include farm-support programs administered by the federal, provincial, territorial, and municipal governments, and by producer associations.

You have to include in income all taxable farm-support payments you received in your 2019 fiscal period, including amounts of $100 or less.

If your farm is operated as a partnership, only one partner should attach the AGR-1 slip to his or her income tax return. However, if your partnership has to file a partnership information return, you should file the AGR-1 slip with that return.

If the annual period of the AGR-1 slip is not the same as the fiscal period of your farming operation, report only the part of the farm-support payments you earned during your normal fiscal period. For example, if your farming business has a fiscal period ending on June 30, 2019, and your AGR-1 slip shows income of $10,000 in box 14, but you earned only $6,000 of that income by June 30, 2019, include only $6,000 in your income for your 2019 fiscal period. Include the remaining $4,000 in your next fiscal period. However, include the AGR-1 slip issued for the 2019 calendar year with your 2019 income tax return or partnership information return.

The back of the AGR-1 slip contains information about how to report amounts that appear in the various boxes.

Canadian Food Inspection Agency (CFIA) Enter the portion of CFIA payments you received for:

■ The loss of an allowable commodity using code 663, “CFIA payment for allowable commodities.”

■ The loss of a commodity that is non-allowable for AgriStability or AgriInvest using code 587, “CFIA payments – Compensation for non-allowable commodities.” For example, a payment you received for the loss of trees destined for use in reforestation.

■ The loss of a supply managed commodity using code 664, “CFIA payment for supply managed commodities.”

■ Costs not directly related to a commodity loss using code 665, “CFIA payment for other amounts.” For example, a payment you received for the cost of carcass disposal.

Payments from the AgriStability and AgriInvest programs Do not report any government contributions you have withdrawn from Fund 2 of your AgriInvest account on this form.

Payments you receive from AgriStability (shown in box 14 of your AGR-1) are considered farming income. Enter these payments on “Line 9544 – Business risk management (BRM) and disaster assistance program payments.”

If you received an AGR-1 slip with a negative amount in box 14, enter this amount on “Line 9896 – Other (specify).” You could have a negative amount if you were in an overpayment in one year and repaid the money the following year.

Other farming income The instructions for completing “Other farming income” apply to forms T1273 and T1274.

Rental income Except for leases explained under line 9613 on page 34, you do not usually include rental income in your farming income. To determine your rental income, use form T776, Statement of Real Estate Rentals. You will find this form in guide T4036, Rental Income. Enter the amount of your net rental income on line 12600 of your income tax return.

However, for AgriStability and AgriInvest, landlords are eligible if the crop share arrangement is a joint venture. For more information, see “Crop share” on page 26.

If you were a landlord renting out land involved in sharecropping, we consider the payments you received, whether in kind or cash, to be rental income for tax purposes.

Line 9540 – Other program payments Include the total income you received from all other stabilization and farm subsidy programs made to farm producers under federal, provincial, municipal, territorial or joint programs that are not listed on Program payment list A or B (on pages 107 and 108) or under line 9544 (below).

If you received an overpayment from any of these programs, enter the amounts you repaid on “Line 9896 – Other (specify).” For more information, see page 53.

Do not include AgriInsurance (production/crop/hail insurance) on this line.

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Line 9544 – Business risk management (BRM) and disaster assistance program payments Enter any payments you received from federal or provincial BRM and disaster assistance programs (AgriStability and Canadian Agricultural Income Stabilization (CAIS), including Interim or Targeted Advance Payments).

If you received an overpayment from any of these programs, enter the amounts you repaid on “Line 9896 – Other (specify).” For more information, see page 53.

Do not include AgriInsurance (production/crop/hail insurance) on this line.

Line 9574 – Resales, rebates, GST/HST for allowable expenses Enter the total resales and rebates of allowable expenses, including GST/HST rebates, unless you have already reduced your expenses by these amounts.

Line 9575 – Resales, rebates, GST/HST for non-allowable expenses, and recapture of capital cost allowance (CCA) Enter the total resales and rebates for non-allowable expenses, including GST/HST rebates, unless you have already reduced your expenses by these amounts.

Recapture of capital cost allowance (CCA) Include in your income the amount of any recapture of CCA you have from selling depreciable property such as tools and equipment.

Fill in the “Calculation of capital cost allowance (CCA) claim” chart on form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses, to find out if you must report any recapture of CCA. For more information, see Chapter 5.

Line 9601 – Agricultural contract work Enter the total of your incidental farming income from such things as custom or contract work, harvesting, combining, crop dusting or spraying, seeding, drying, packing, cleaning, and treating seeds.

To report income you received from renting farm machinery, see “Line 9614 – Machine rentals” on page 34.

If you are a custom feedlot operator, see page 28 for information on reporting your custom feeding income.

Line 9605 – Patronage dividends Enter your total patronage dividends (other than those for consumer goods or services) that are received by eligible members of agricultural co-operatives on line 9605.

If you receive a patronage dividend in the form of “tax deferred co-operative shares,” there is no need to immediately include it in income. Tax may be deferred to the year in which the shares are disposed of or deemed to be disposed of. The balance of the shares could then be carried forward and sheltered until actual or deemed disposition.

The temporary deferral of tax on patronage dividends paid by an agricultural co-operative corporation in the form of eligible shares is extended in respect of eligible shares issued before 2021.

Line 9607 – Interest Enter the total incidental interest earned on business accounts related to your farming business, not interest on personal accounts and investments.

Line 9610 – Gravel Enter the amounts you received from the sale of soil, sand, gravel, or stone. For some of these items, you can claim a depletion allowance.

Line 9611 – Trucking (farm-related only) Enter the amounts you received for trucking related to your farming business.

Line 9612 – Resales of commodities purchased Report the total sales of commodities that you did not produce on your farm. These are commodities that you bought for resale.

Enter the corresponding purchases you made in this fiscal period on “Line 9827 – Purchases of commodities resold.” For more information, see page 51.

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Line 9613 – Leases (gas, oil well, surface, etc.) If you received payments for leasing your farmland for petroleum or natural gas exploration, these payments will be either income or a capital receipt.

Include in your income the yearly amounts for rental, severance, or inconvenience from a surface rental agreement.

The first payment from these agreements is often larger than the rest of the annual payments. However, the agreement may not specify how much of the first payment is for such things as damage to land, land improvements, severance, inconvenience, or the first year’s rent. When this happens, in the year you received the first payment, include in income an amount that is equal to the annual payment you will receive in the following years. The rest of the first payment is a payment for property. This may result in either a capital gain or loss. For more information on capital gains, see Chapter 8.

Line 9614 – Machine rentals Enter the amounts you received from renting your farm machinery.

Line 9600 – Other (specify) Enter the total amount of all other types of farming income not listed on the form. Then list the items on the blank lines provided under it.

Report all program non-allowable farming income including:

■ aquaculture

■ trees and seedlings sold for use in reforestation

■ peat moss

■ wild game reserves

Income from wood sales, as defined in “Wood sales (including stumpage)” on page 28, is also non-allowable but is reported using code 259.

Income from cannabis (except for industrial hemp) is also non-allowable but is reported using code 382.

The following paragraphs identify some of the other income items you can enter on line 9600.

Insurance proceeds Enter the amount of any insurance proceeds you received as compensation for loss or damage to certain types of property. Report the amount of insurance proceeds that did not relate to a specific commodity. For example, you may have received insurance proceeds for damage to a building due to fire.

Enter the total insurance proceeds on this line if you are being reimbursed for either:

■ the cost of non-depreciable property you previously deducted as a current expense

■ the cost of property that was a saleable item

Indicate “insurance proceeds” on one of the lines below line 9600. If the insurance proceeds compensated you for damages to depreciable property, and you used all of them to repair the property within a reasonable period of time, include the proceeds as income on this line. Claim a deduction for the same amount in the “Expenses” area of the form. Claim repairs to depreciable property that is machinery on line 9760 and repairs to motor vehicles on line 9819. If you did not spend all of the insurance proceeds on repairs within a reasonable length of time, we consider the amounts you did not spend to be proceeds of disposition. For more information, see “Column 5 – Proceeds of dispositions in the year” on page 76.

Insurance proceeds that compensate you for replacement of lost or destroyed depreciable property are considered to be proceeds of disposition for that depreciable property. Do not include this type of insurance proceeds on line 9600. For more information, see Chapter 5. For information on how insurance affects the adjusted cost base of capital property, see Chapter 8.

Do not include insurance proceeds from federal, provincial, or municipal government programs. For the codes to use for government insurance programs, see the Program payment lists beginning on page 107.

Miscellaneous You can deduct 100% of the cost of property such as small tools if they cost less than $500. If you bought the property and you later sold that property, you have to include this amount as income you received from the sale.

Include in your income prizes you won from fairs or farming exhibitions. For more information, see Income Tax Folio S3-F9-C1, Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime.

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Enter resales and rebates of allowable expenses on line 9574.

Summary of income From the “Income” section of the form, enter the amount of Total A and the amount of Total B in the “Summary of income” table. Add the totals for your gross farming income. Gross farming income is your total farming income before you deduct expenses.

Expenses Use the Commodity and Program payment code lists found at the back of this guide to report your commodity purchases and repayment of program benefits in this section. If you have more than one farming operation, use form T1274 for each additional operation.

Codes may change from year to year. Check the lists to make sure you use the right code.

If you use the accrual method of accounting, report all your changes in opening and closing commodity inventories separately, using the commodity code for both entries.

You cannot include expenses for your personal use of either of the following:

■ property of your farming business

■ partnership property or services

In addition, you cannot include any of the following as part of your expenses:

■ the cost of saleable goods or services you, your family, or your partners and their families personally used or consumed, such as dairy products, eggs, fruit, vegetables, poultry, and meat

■ donations to charities and political contributions

■ interest and penalties you paid on your personal income tax

■ most life insurance premiums (see “Line 9804 – Other insurance premiums” on page 43)

For AgriStability, there are two types of expenses:

■ allowable expenses

■ non-allowable expenses

Allowable expenses are the operating or input expenses you paid that directly relate to producing your commodities.

Non-allowable expenses are costs not directly related to producing your commodities. These include amounts paid for interest and capital-related expenses.

For AgriInvest, only allowable commodity purchases are used to calculate your Allowable Net Sales.

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Current or capital expenses Renovations and expenses that extend the useful life of your property or improve it beyond its original condition are usually capital expenses. However, an increase in a property’s market value because of an expense is not a major factor in deciding whether the expense is capital or current. To decide whether an amount is a current expense or a capital expense, consider your answers to the questions in the following chart.

Current or capital expenses

Criteria Capital expenses Current expenses

Does the expense provide a lasting benefit?

A capital expense generally gives a lasting benefit or advantage. For example, the cost of putting vinyl siding on the exterior walls of a wooden house is a capital expense.

A current expense is one that usually recurs after a short period. For example, the cost of painting the exterior of a wooden house is a current expense.

Does the expense maintain or improve the property?

The cost of a repair that improves a property beyond its original condition is probably a capital expense. If you replace wooden steps with concrete steps, the cost is a capital expense.

An expense that simply restores a property to its original condition is usually a current expense. For example, the cost of repairing wooden steps is a current expense.

Is the expense for a part of a property or for a separate asset?

The cost of replacing a separate asset within that property is a capital expense. For example, the cost of buying a compressor for use in your business operation is a capital expense. This is the case because a compressor is a separate asset, and is not a part of the building.

The cost of repairing a property by replacing one of its parts is usually a current expense. For instance, electrical wiring is part of a building. Therefore, an amount you spend to rewire is usually a current expense, as long as the rewiring does not improve the property beyond its original condition.

What is the value of the expense? (Use this test only if you cannot determine whether an expense is capital or current by considering the three previous tests.)

Compare the cost of the expense to the value of the property. Generally, if the cost is of considerable value in relation to the property, it is a capital expense.

This test is not a determining factor by itself. You might spend a large amount of money for maintenance and repairs to your property all at once. If this cost was for ordinary maintenance that was not done when it was necessary, it is a maintenance expense, and you deduct it as a current expense.

Is the expense for repairs made to used property that you acquired intended to put it in suitable condition for use?

The cost of repairing used property that you acquired to put it in a suitable condition for use in your business is considered a capital expense even though in other circumstances it would be treated as a current operating expense.

Where the repairs were for ordinary maintenance of a property you already had in your business, the expense is usually current.

Is the expense for repairs made to an asset in order to sell it?

The cost of repairs made in anticipation of selling a property, or as a condition of sale, is regarded as a capital expense.

Where the repairs would have been made anyway, but a sale was negotiated during the course of the repairs or after their completion, the expense is considered current.

For more information, see Chapter 5 and Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Do not include any of the following in your expenses: ■ salary, wages (including drawings) paid to self, partner(s), or both

■ the cost of saleable goods or services you, your family, or your partners and their families used or consumed (including items such as food, home maintenance, and business properties)

■ items such as dairy products, eggs, fruit, vegetables, poultry, and meat

■ donations to charities and political contributions

■ interest and penalties you paid on your income tax

■ most life insurance premiums (for information on a limited exception, see “Line 9804 – Other insurance premiums” on page 43)

■ the part of any expenses that can be attributed to non-business use of business property

■ most fines and penalties imposed, under the law of Canada or a province or a foreign country

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Disability-related modifications You can deduct expenses you incur for eligible disability related modifications made to a building in the year you paid them. You can do this instead of adding them to the capital cost of your building. Eligible disability related modifications include changes you make to accommodate wheelchairs, such as:

■ installing hand activated power door openers

■ installing interior and exterior ramps

■ modifying a bathroom, an elevator, or a doorway

You can also deduct expenses paid to install or get the following disability related devices and equipment:

■ elevator car position indicators (such as braille panels and audio indicators)

■ visual fire alarm indicators

■ listening or telephone devices for people who have a hearing impairment

■ disability specific computer software and hardware attachments

Grants, credits, and rebates Subtract, from the applicable expense, any grant, credit, and rebate you received.

If the grant, credit, and rebate are for a depreciable asset, subtract the amount of the rebate from the property’s capital cost before calculating the capital cost allowance. For more information, see Chapter 5. If the asset qualifies for the investment tax credit, this reduction to the capital cost will also affect your claim. For more information, see form T2038(IND), Investment Tax Credit (Individuals).

Input tax credits are considered government assistance. Include the amount you claimed on line 108 of your GST/HST return on line 9574 or 9575 only if you cannot apply the rebate, grant, or assistance you received to reduce a particular expense or an asset’s capital cost.

GST/HST input tax credits and exempt goods and services GST/HST registrants may claim an input tax credit for the GST/HST they paid or owe for expenses used to provide taxable goods and services at the rates of 0%, 5%, 13%, or 15%.

If you claim the GST/HST you paid or owe on your expenses as an input tax credit, reduce the amounts of the business expenses you claim by the amount of the input tax credit. Do this when the GST/HST for which you are claiming the input tax credit was paid or became payable, whichever is earlier. Enter the net expense figure on the appropriate line of form T1273 or T1274.

Input tax credits you claim for the purchase of depreciable property used in your business will affect your claim for CCA. Include the amount you claimed on line 108 of your GST/HST return on line 9574 or 9575 only if you cannot apply the rebate, grant, or assistance you received to reduce a particular expense or an asset’s capital cost.

For more information on how claiming the input tax credit for registrants will affect your CCA claim, see “Column 2 – Undepreciated capital cost (UCC) at the start of the year” on page 74.

A limited number of goods and services you purchase are exempt from GST/HST. Because you do not pay GST/HST on these purchases, there is no input tax credit to claim. Examples of exempt purchases of property include:

■ insurance services sold by insurance companies, agents, or brokers

■ most services provided by financial institutions, such as arranging loans or mortgages

■ most health, medical, and dental services

For more information on claiming the input tax credits and the percentage of use in commercial activity, see GST/HST Memorandum 8.1, General Eligibility Rules and GST/HST Memorandum 8.2, General Restrictions and Limitations.

Eligible registrants can file their GST/HST returns online by using GST/HST NETFILE or the “File a return” service in My Business Account at canada.ca/my-cra-business-account. For information about GST/HST, go to canada.ca/gst-hst.

Prepaid expenses A prepaid expense is an expense you paid for ahead of time. Under the accrual method of accounting, claim the expense you prepay in the year or years in which you get the related benefit. Suppose your fiscal year-end is December 31, 2019. On June 30, 2019, you prepay the rent on your building for a full year (July 1, 2019, to June 30, 2020). You can only deduct one half of this rent as an expense in 2019. You can deduct the other half as an expense in 2020.

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Under the cash method of accounting, you cannot deduct a prepaid expense amount (other than for inventory) relating to a tax year that is two or more years after the year the expense is paid. However, you can deduct the part of an amount you paid in a previous year for benefits received in the current tax year. These amounts are deductible as long as you have not previously deducted them.

If you paid $600 for a three-year service contract for office equipment in 2019, you can deduct $400 in 2019. This represents the part of the expense that applies to 2019 and 2020. On your 2021 income tax return, you could then deduct the balance of $200 for the part of the prepaid lease that applies to 2021.

For more information, see Interpretation Bulletin IT-417, Prepaid Expenses and Deferred Charges.

Business-use-of-home expenses You can deduct expenses for the farming business use of a workspace in your home, if you meet one of these conditions:

■ it is your principal place of business

■ you use the space only to earn income from your farming business, and you use it on a regular and ongoing basis to meet your clients or customers

You can deduct part of your maintenance costs such as heating, home insurance, electricity, and cleaning materials. You can also deduct part of your property taxes, mortgage interest, and CCA.

If you rent your home, you can deduct the part of the rent and any expenses you incur that relate to the workspace. To calculate the part you can deduct, use a reasonable basis, such as the area of the workspace divided by the total area of your home.

The amount you can deduct for business-use-of-home expenses cannot be more than your net income from the farming business before you deduct these expenses. In other words, for income tax purposes, you cannot use these expenses to increase or create a farming business loss. If you claimed business-use-of-home expenses and you report a farming loss on line 9944, you must adjust your loss for income tax purposes at line 9934. For more information on how to make this adjustment, see the instructions for line 9934 on page 58.

The capital gain and recapture rules will apply if you deduct CCA on the business use part of your home and you later sell your home. For more information about these rules, see Chapters 6 and 8 as well as guide T4037, Capital Gains.

Include your expenses for business-use-of-home on “Line 9896 – Other (specify)” of form T1273 or T1274. For more information, see “Additional expenses (partnerships)” on page 19 and “Line 9934 – Adjustment to business-use-of-home expenses” on page 58.

Example Marjorie calculates that $85 of her household electrical expense is for her farming business use. The total electrical expenses for her farm outbuildings are $1,200. She enters $1,200 on line 9799 and $85 on line 9896.

Business-use-of-home expenses are non-allowable expenses for AgriStability and AgriInvest.

For more information, see Income Tax Folio S4-F2-C2, Business Use of Home Expenses.

Commodity purchases Report the following as commodity purchases:

■ feed

■ seed

■ plants

■ transplants

■ livestock

■ marketable products

If you are an apple producer replacing damaged or dead trees, enter apple tree purchases using the code for apples. If you are buying trees to expand an orchard, enter this purchase as a capital expense.

Do not include the cost of seeds and plants you used in your personal vegetable or flower garden.

Include expenses you incurred from the use of commodities with the commodity purchases, except for pollination fees. For example, report stud fees with horse purchases. However, enter pollination fees using code 376.

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If you made a payment in kind for a farming business commodity purchase, enter the value of the payment as a purchase. For more information, see “Payment in kind” on page 26.

If you are a tenant in a crop share, only include your share of the crop in your income or expenses.

Livestock owners and custom feedlot operators with prepared feed purchases If the ingredients on your purchase invoices of prepared feed and protein supplements are listed separately, enter:

■ allowable commodities (such as grains, forage, and oilseeds) and protein supplements using code 046

■ the remaining expenses (such as minerals and salts) using code 570

If the ingredients on your purchase invoices of prepared feed and protein supplements are not listed separately, enter your total purchase using code 571 (we will use 65% of this amount to calculate your Allowable Net Sales).

Livestock owners with custom feeding expenses If the ingredients on your purchase invoices are listed separately, enter:

■ allowable commodities (such as grains, forage, and oilseeds) and protein supplements using code 577

■ the remaining expenses (such as minerals and salts) using code 572

If the ingredients on your purchase invoices are not listed separately, enter your total purchase using code 573 (we will use 70% of this amount to calculate your Allowable Net Sales).

Ranch fur operators with prepared feed purchases If the ingredients on your purchase invoices of prepared feed and protein supplements are listed separately, enter:

■ allowable commodities (such as grains, forage, and oilseeds) and protein supplements using code 046

■ the remaining expenses (such as minerals and salts) using code 310

If the ingredients on your purchase invoices of prepared feed and protein supplements are not listed separately, enter your total purchases using code 574 (we will use 20% of this amount to calculate your Allowable Net Sales).

Livestock insurance premiums Enter premiums you paid for private livestock insurance using “Line 9953 – Private insurance premiums for allowable commodities.”

Repayment of program benefits If you had to repay a program benefit, report the repayment as a purchase using the code for the program. Amounts you repaid are shown in box 17 of your AGR-1 slip.

If you repay a program benefit from the programs listed on lines 9540 and 9544, enter the amounts you repaid on “Line 9896 – Other (specify).”

AgriStability program – Allowable expenses Line 9661 – Containers and twine Enter the total amount you paid for materials to package, contain, or ship your farm produce or products. If you operated a nursery or greenhouse, report the cost of your containers and pots for the plants you sold.

Line 9662 – Fertilizers and soil supplements Enter the total amount you paid for fertilizers and lime you used in your farming business.

If you used soil supplements or other growth media, report the amounts you paid for them here. Examples of soil supplements include mulch, sawdust, and weed-mats.

Report your expenses for water you purchased to produce your commodity (crop or livestock) if it was not included in your municipal taxes.

Line 9663 – Pesticides and chemical treatments Enter the total amount you paid for herbicides, insecticides, rodenticides, and fungicides.

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Insecticides include chemicals for pest control purposes as well as any predators or parasites introduced for that use. Also report the total amount you paid for chemicals used in treating water, manure, or slurry, as well as those used in disinfecting equipment and facilities.

Report seed treatment expenses on this line if the treatment is listed separately from the seed purchase on your original invoice. If not listed separately, include the treatment as part of the commodity purchase.

Line 9665 – Insurance premiums (crop or production) Enter the total amount of premiums paid for crop or production insurance (AgriInsurance), including hail insurance on this line. For information on other types of insurance premiums such as private, business-related, or motor vehicle insurance, see “Line 9804 – Other insurance premiums” on page 43.

Line 9713 – Veterinary fees, medicine, and breeding fees Enter the total amount you paid for medicine for your animals, and for veterinary and breeding fees. Examples of such fees include the cost of artificial insemination, stud service and semen, embryo transplants, disease testing, and neutering or spaying.

Line 9714 – Minerals and salts Enter the total purchases of minerals, salts, vitamins, and premixes (which are mainly minerals and vitamins).

If you have purchased feed expenses, see page 38 for information on the codes you use to report these amounts.

Line 9764 – Machinery (gasoline, diesel fuel, oil) Enter the total amount you paid for fuel and lubricants for your machinery used in your farming operation.

Line 9799 – Electricity Only the part of your electricity costs that relates to your farming business is deductible. To determine the part you can deduct, keep a separate record of the amounts that apply to the farmhouse and other farm properties.

The business part of your electricity expense will depend on how much electricity is used for the barns and shops. Because the electricity for the farmhouse is a personal expense, you cannot deduct it unless you meet the conditions explained in “Business-use-of-home expenses” on page 38. Include your expenses for business-use-of-home on “Line 9896 – Other (specify).”

Do not include the electricity expense for a house that you rented to someone else. This is a rental expense, which you enter on form T776, Statement of Real Estate Rentals. You can get this form in guide T4036, Rental Income.

Line 9801 – Freight and shipping Enter the amount you paid for shipping farm inputs to your operating site and shipping farm produce to market.

Enter amounts you paid for carcass disposal on this line.

If you were trucking for someone else, the trucking expenses are non-allowable for AgriStability. For more information on how to report these costs, see “Line 9798 – Agricultural contract work.”

For information on how to report freight and shipping charged after the point of sale, see “Line 575 – Point of sale adjustments.”

Line 9802 – Heating fuel Enter the total amount you paid for natural gas, coal, and oil to heat farm buildings. Also, enter your expenses for fuel used for curing tobacco, crop drying, or greenhouses.

You can deduct only the part of these costs that relate to your farming business. To determine the part you can deduct, keep a separate record of the amounts you paid for the farmhouse and other farm properties.

The business part of your heating fuel expense will depend on how much heating fuel you used for the barns and shops. Because the heating fuel for the farmhouse is a personal expense, you cannot deduct it unless you meet the conditions explained in “Business-use-of-home expenses” on page 38. Include your expenses for business-use-of-home on “Line 9896 – Other (specify).”

Do not include heating fuel expenses for a house that you rented to someone else. This is a rental expense, which you enter on form T776, Statement of Real Estate Rentals. You can get this form in guide T4036, Rental Income.

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Line 9815 – Arm’s length salaries Enter the amount of gross wages you paid to your employees. Include the cost of board for hired help. Do not include salaries paid to related persons (see the definition below). If you paid salaries to related persons, see “Line 9816 – Non-arm’s length salaries” on page 48.

Related persons are:

■ individuals connected by blood relationship, marriage or common-law partnership, or adoption

■ a corporation, and

– an individual, group of persons, or entity that controls the corporation

– an individual, group of persons, or entity of a related group that controls the corporation

– any individual related to a person described above

Salaries or drawings paid to yourself are not deductible for tax purposes.

As the employer, you must deduct your part of the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP) contributions and employment insurance premiums. You can also deduct workers’ compensation amounts payable on employees’ remuneration and Provincial Parental Insurance Plan (PPIP) premiums. The PPIP is an income replacement plan for residents of Quebec. For details, contact Revenu Québec. For information on making payroll deductions, go to canada.ca/payroll.

Do not deduct the amounts you withheld from your employees’ remuneration since you already deducted them in the amount you claimed as wages.

You may have paid wages in kind to your employees. For example, you may have paid your employees by giving them livestock or grain instead of cash. If you did this:

■ your employees include in their income the value of the livestock or grain

■ you include the same amount in your gross sales for the year and deduct it as a wage expense

Keep a detailed record of the amounts you paid to each employee and the employee’s name, address, and social insurance number.

Line 9822 – Storage/drying Enter the amount you paid for storing and drying commodities. For example, include:

■ amounts paid for storage and drying services

■ air treatment expenses

■ purchase of germination inhibitors and other preservative agents

Enter electricity and heating fuel costs incurred in storage and drying commodities on lines 9799, “Electricity,” and 9802, “Heating fuel,” respectively.

Line 9836 – Commissions and levies Enter the amount you paid in commissions and levies incurred in the sale, purchase, or marketing of commodities. Also include levies paid to marketing boards, except those due to penalties or fines you incurred. Do not include commissions paid to a salesperson you contracted to market your product.

If you market fruit or vegetables through a co-op, enter your pack-and-sell expenses here, except pack-and-sell expenses incurred after the point of sale. Enter these amounts on “Line 575 – Point of sale adjustments.”

Line 9953 – Private insurance premiums for allowable commodities Enter your private insurance premiums paid for allowable commodities such as livestock.

Enter premiums for hail insurance on “Line 9665 – Insurance premiums (crop or production).”

Do not include any premiums for:

■ private insurance for non-allowable commodities

■ business-related insurance

■ motor vehicle insurance

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For information on other types of insurance premiums, see “Line 9804 – Other insurance premiums” on page 43.

AgriStability program – Non-allowable expenses Line 9760 – Machinery (repairs, licences, insurance) Enter the total amount of repair, licence fee, and insurance premiums for your machinery. If you received insurance proceeds to help pay for repairs, see “Insurance proceeds” on page 34.

Line 9765 – Machinery lease/rental Enter the amount you paid for leasing machinery used to earn your farming income.

If you lease a passenger vehicle, see “Line 9829 – Motor vehicle interest and leasing costs” on page 51.

If you entered a lease agreement, you can choose to treat your lease payments as combined payments of principal and interest. However, you and the person from whom you are leasing must agree to treat the payments this way.

In this case, we consider that you have:

■ bought the machinery rather than leased it

■ borrowed an amount equal to the fair market value (see the definition on page 54) of the leased machinery

You can deduct the interest part of the payment as an expense. You can also claim capital cost allowance (CCA) on the machinery. For more information on CCA, see Chapter 5. You can make this choice as long as the machinery qualifies and the total fair market value (FMV) of all the machinery that is subject to the lease is more than $25,000. For example, a combine that you lease with a FMV of $35,000 qualifies. However, office furniture and automobiles often do not.

To treat your lease this way, attach one of the following forms with your income tax return for the year you make the lease agreement:

■ form T2145, Election in Respect of the Leasing of Property

■ form T2146, Election in Respect of Assigned Leases or Subleased Property

Both of these forms explain which property qualifies for this treatment.

Line 9792 – Advertising and promotion costs Enter the amount you paid for advertising and promoting your farm products.

If you market fruit or vegetables through a co-op, see “Line 9836 – Commissions and levies” for information on how to report your pack-and-sell expenses.

Line 9795 – Building and fence repairs Enter the amount you paid for repairs to fences and all buildings you used for farming, except your farmhouse. Do not include the value of your own labour. If the expenditure improved a fence or building beyond its original condition, the costs are capital expenditures. Add the expenditure to the cost of the asset or building on your capital cost allowance (CCA) charts on form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses. We explain the CCA charts in Chapter 5.

For more information on capital expenditures, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Note You may have received insurance proceeds to pay for the cost of repairs. If the insurance proceeds compensated you for damages to depreciable property such as buildings or fences, and you used all of them to repair the property within a reasonable period of time, you can claim a deduction for the amount spent on repairs on line 9795. However, you have to include the insurance proceeds as income on line 9600. If you did not spend all the insurance proceeds on repairs within a reasonable length of time, include the remainder as proceeds of disposition in column 5 of Area A, “Calculation of capital cost allowance (CCA) claim,” on form T1175. For more information, see “Column 5 – Proceeds of dispositions in the year” on page 76.

Line 9796 – Land clearing and draining Enter the total of the expenses listed below. In most cases, you can deduct the costs for:

■ clearing the land of brush, trees, roots, and stones

■ first ploughing of the land for farm use

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■ building an unpaved road

■ installing land drainage

You do not have to deduct all of the costs in the year you paid them. If you paid all of the costs, you can deduct any part of them in the year you paid them. You can carry forward any part of the costs you did not deduct to another year. However, if you rented land to someone else, you cannot deduct the costs mentioned above. Instead, you may be able to do one of the following:

■ add these costs to the cost of the land

■ add these costs to the cost of the building if you plan to build on the land right away

■ include these costs under Class 8 in the CCA charts on form T776, Statement of Real Estate Rentals, if you installed a tile, plastic, or concrete land drainage system. In this case, you also need to add the costs for a tile, plastic or concrete land drainage system to Class 8 on your CCA charts on form T2042. For more information, see Chapter 5

For more information, see Interpretation Bulletin IT-485, Cost of clearing or levelling land.

Improving land You cannot deduct the cost of a paved road. Instead, you have to add this cost to Class 17 of your CCA charts on form T1175. For more information, see Chapter 5.

You can deduct most of the cost to drill or dig water wells in the year you did the work. However, you have to add some of the costs to Class 8 on your CCA charts. The costs you add to Class 8 are those you incurred to purchase and install:

■ the casing and cribwork for the well

■ the system that distributes water, including the pump and pipes

You can deduct amounts you paid to have public utilities brought to your farm, as long as the installations remain the property of the utility.

You can deduct amounts you paid under the Canada Cooperatives Act to build a distribution system under a gas service contract.

Line 9798 – Agricultural contract work Enter the expenses you paid for custom and contract work, other than custom feeding. For example, you may have had a contract with someone who cleaned, sorted, graded, and sprayed the eggs your hens produced, or someone who had facilities to age the cheese you produced. You may have also contracted someone to do your harvesting, combining, crop dusting, or seed cleaning.

If you are a custom feedlot operator, see page 39 for information on reporting your custom feeding expenses.

For AgriStability, agricultural contract work is a non-allowable expense. However, if the charges on your invoice are listed separately, report amounts that are allowable expenses for AgriStability on their specific line.

For example, your invoice lists the costs charged for chemical, fuel, and salaries. Enter these amounts as follows:

■ chemical on “Line 9663 – Pesticides and chemical treatments”

■ fuel on “Line 9764 – Machinery (gasoline, diesel fuel, oil)”

■ salaries on “Line 9815 – Arm’s length salaries”

Enter the remaining non-allowable amounts on line 9798.

Line 9804 – Other insurance premiums Enter the amount of business-related insurance premiums you paid to insure your farm buildings, farm equipment (excluding machinery and motor vehicles), and business interruption. For information on reporting premiums for hail insurance or livestock, see “Line 9665 – Insurance premiums (crop or production)” on page 40, and “Line 9953 – Private insurance premiums for allowable commodities” on page 41.

In most cases, you cannot deduct your life insurance premiums. However, if you use your life insurance policy as collateral for a loan related to your farming business, you may be able to deduct a limited part of the premiums you paid. For more information, see Interpretation Bulletin IT-309, Premiums on Life Insurance Used as Collateral.

In most cases, you cannot deduct the amounts you paid to insure personal property such as your home or car. However, if you used the personal property for your farming business, you can deduct the business part of these costs. For more information, see “Business-use-of-home expenses” on page 38, and “Line 9819 – Motor vehicle expenses” on page 48.

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Premiums to a private health services plan (PHSP) You can deduct premiums paid to a private health services plan (PHSP) if you meet the following conditions:

■ your net income from self-employment (excluding losses and PHSP deductions) for the current or previous year is more than 50% of your total income*

■ your income from sources other than self-employment** is $10,000 or less for the current or previous year

■ you are actively engaged in your farming business on a regular and continuous basis, individually or as a partner in a partnership

■ the premiums are paid to insure yourself, your spouse or common-law partner, or any member of your household

* To make this claim, calculate your total income as follows:

– the amount from line 150 of your 2018 income tax return or from line 15000 of your 2019 income tax return, whichever applies, before you deduct any amounts for PHSPs; minus

– the amount you entered on lines 207, 212, 217, 221, 229, 231, and 232 of your 2018 income tax return or on lines 20700, 21200, 21700, 22100, 22900, 23100, and 23200 of your 2019 income tax return, whichever applies.

** To make this claim, calculate your income from sources other than self-employment as follows:

– the amount from line 150 of your 2018 income tax return or the amount from line 15000 of your 2019 income tax return, whichever applies, before you deduct any amounts for PHSPs; minus

– the amount you entered on lines 135, 137, 139, 141, 143 (excluding business losses that reduced the net amount reported on those lines), 207, 212, 217, 221, 229, 231, and 232 on your 2018 income tax return or the amount you entered on lines 13500, 13700, 13900, 14100, 14300 (excluding business losses that reduced the net amount reported on those lines), 20700, 21200, 21700, 22100, 22900, 23100, and 23200 of your 2019 income tax return, whichever applies.

You cannot claim a deduction for PHSP premiums if another person deducted the amount, or if you or anyone else claimed the premiums as a medical expense. For your premiums to be deductible, your PHSP coverage has to be paid under a contract with one of the following:

■ an insurance company

■ a trust company

■ a person or partnership in the business of administering PHSPs

■ a tax-exempt trade union of which you or the majority of your employees are members

■ a tax-exempt business organization or a tax-exempt professional organization of which you are a member

For more information on PHSPs, see Interpretation Bulletin IT-339, Meaning of ‘private health services plan’ (1988 and subsequent taxation years) or go to canada.ca/cra-private-health-services-plan.

For the purposes of this claim, the following terms apply:

Arm’s length employees are, generally, employees who are not related to you and who are not carrying on your business with you, for example, as your partners. For more information, see “Arm’s length” on page 71.

Qualified employees are arm’s length, full-time employees who have three months service since they last became employed with a business carried on by you, a business in which you are a majority interest partner, or a business carried on by a corporation affiliated with you. Temporary or seasonal workers are not qualified employees.

Insurable persons are people to whom coverage is extended and who are either:

■ qualified employees

■ people who would be qualified employees if they had worked for you for three months

■ people carrying on your business (including yourself and your partners)

How to calculate your maximum deduction for PHSPs The following sections explain how to calculate your maximum PHSP deduction based on whether you had employees and whether you insured them throughout the year or for part of the year. Find the section that describes your situation.

Note All PHSP deduction limits and calculated limits must include all applicable taxes as part of the total dollar amount.

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If you did not have any employees throughout 2019 Your PHSP deduction is restricted by an annual dollar limit. The limit is a maximum of:

■ $1,500 for yourself

■ $1,500 for your spouse or common-law partner and each household member that is 18 years of age or older at the start of the period they were insured

■ $750 for each household member under the age of 18 at the start of the period

The maximum deduction is also limited by the number of days that person was insured. Calculate your allowable maximum for the year by using the following formula:

A × (B + C), where: 365

A is the number of days during the period of the year you insured yourself and your household members, if applicable

B equals $1,500 × the number of household members age 18 and over insured during that period

C equals $750 × the number of household members under the age of 18 insured during that period

Example 1 Edwin was a sole proprietor who ran his farm alone in 2019. He had no employees and did not insure any of his household members. Edwin paid $2,000 for PHSP coverage in 2019. His coverage lasted from July 1 to December 31, 2019, (a total of 184 days).

Edwin’s maximum allowable PHSP deduction is calculated as follows:

184 × $1,500 = $756 365

Even though Edwin paid $2,000 in premiums in 2019, he can only deduct $756 because the annual limit is $1,500 and he was only insured for half of the year. If he had been insured for the entire year, his deduction limit would be $1,500.

Example 2 Bruce was a sole proprietor who ran his farm alone in 2019. He had no employees. From January 1 to December 31, he insured himself, his wife, and his two sons. Bruce paid $1,800 to insure himself, $1,800 to insure his wife, and $1,000 for each of his sons. One of his sons was 15 years old and the other turned 18 on September 1. Bruce’s PHSP deduction is limited to the following amounts:

■ $1,500 for himself

■ $1,500 for his wife

■ $750 for his 15-year-old son

■ $750 for the son who turned 18 (this limit applies because he did not turn 18 until after the insured period began)

If you had employees throughout 2019 If you had at least one qualified employee (see the term defined on page 44) throughout all of 2019, and at least 50% of the insurable persons in your business were qualified employees, your claim for PHSP premiums is limited in a different way. Your limit is based on the lowest cost of equivalent coverage for each of your qualified employees.

Use the following steps to calculate your maximum allowable claim for the PHSP premiums paid for yourself, your spouse or common-law partner, and your household members.

For each of your qualified employees, calculate the following:

X × Y = Z, where:

X equals the amount you would pay to provide yourself, your spouse or common-law partner, and your household members with coverage equal to that provided to a particular employee, his or her spouse or common-law partner, and household members

Y equals the percentage of the premium you pay for that particular employee

Z equals your limit based on that particular employee

If you had more than one qualified employee, you have to do the X × Y = Z calculation for each employee. Your limit is then the least amount you calculate for each employee.

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Example 1 You have one qualified employee. To provide yourself with coverage equal to his or hers, you pay a premium of $1,800. You pay 60% of your employee’s premium. Your deduction limit for yourself is $1,080, calculated as follows:

$1,800 (amount X) × 60% (amount Y) = $1,080 (amount Z)

The maximum you can claim is $1,080, if you had only one qualified employee.

Example 2 You have three qualified employees, Jack, Jill, and Sue. The following table shows how much you would pay for coverage equivalent to each of theirs, and the percentage of each employee’s premium you pay.

Name of employee Cost of equivalent coverage for yourself

% of the employee’s premium you pay

Jack $1,500 20%

Jill $1,800 50%

Sue $1,400 40%

You have to do the following three calculations:

Jack: $1,500 (X) × 20% (Y) = $300 (Z)

Jill: $1,800 (X) × 50% (Y) = $900 (Z)

Sue: $1,400 (X) × 40% (Y) = $560 (Z)

Your limit is $300, the lowest of the amounts you calculated for the three employees.

Note If you have a qualified employee with no coverage, you cannot claim your PHSP premiums as a deduction from self-employment income. However, you may be able to claim them as medical expenses.

If you had employees throughout 2019 but the number of arm’s length employees you insured was less than 50% of all the insurable persons in your business, your maximum allowable deduction is the lesser of the following two amounts:

Amount 1 Determine this amount by calculating:

A × (B + C), where: 365

A is the number of days during the period of the year you insured yourself and your household members, if applicable, but insured less than 50% of your employees

B equals $1,500 × the number of household members 18 years of age or older insured during that period

C equals $750 × the number of household members under the age of 18 insured during that period

Amount 2 If you had at least one qualified employee, Amount 2 is the lowest cost of equivalent coverage for each qualified employee, calculated by using the X × Y = Z formula in the previous example. If you did not have at least one qualified employee, the limit in Amount 1 will apply.

If you had employees for part of the year If you had at least one qualified employee for part of the year and your insurable arm’s length employees represented at least 50% of all the insurable persons in your business, calculate your limit for that period by using the X × Y = Z formula of “If you had employees throughout 2019” on page 45.

For the rest of the year when you had no employees or when your insurable arm’s length employees represented less than 50% of all the insurable persons in your business, your deduction limit for that remaining period is the lesser of Amount 1 and Amount 2, calculated in the same way as in the previous section.

Undeducted premiums If you deduct only part of your PHSP premium at line 9804 and you paid the premium in the year, you can include the undeducted balance when you calculate your non-refundable medical expense tax credit. For more information, see “Line 33099” in your Federal Income Tax and Benefit Guide.

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Line 9805 – Interest (real estate, mortgage, other) You can deduct interest you incurred on money borrowed for farming business purposes or to acquire property for farming business purposes. However, there are limits on:

■ The interest you can deduct on money you borrowed to buy a passenger vehicle or a zero-emission passenger vehicle. For more information, see “Line 9819 – Motor vehicle expenses” on page 48.

■ The amount of interest you can deduct for vacant land. Usually, you can only deduct interest up to the amount of income from the land that remains after you deduct all other expenses. You cannot use any remaining amounts of interest to create or increase a loss, and you cannot deduct them from other sources of income.

You can report interest you paid on any real estate mortgage you incurred to earn farming income, but you cannot deduct the principal part of loan or mortgage payments. Do not deduct interest on money you borrowed for personal purposes or to pay overdue income taxes.

You may be able to report interest expenses for a property you used for farming business purposes, even if you have stopped using the property for such purposes because you are no longer in the farming business. For more information, see Income Tax Folio S3-F6-C1, Interest Deductibility, or call 1-800-959-5525.

Line 9807 – Memberships/subscription fees Enter the amount of annual dues or fees you paid to keep your membership in a trade or commercial farming association. You cannot deduct club membership dues (including initiation fees) if the main purpose of the club is dining, recreation, or sporting activities.

You can also report fees for subscriptions to farming publications you use in your farming business.

Enter the amounts you paid for your AgriStability Administrative Cost Share (ACS) and your fee on this line.

Line 9808 – Office expenses You can report the cost of office expenses. These include small items such as pens, pencils, paper clips, stationery, and stamps. Office expenses do not include items such as calculators, filing cabinets, chairs, and desks. These are capital items. For more information on capital property, see Chapter 6.

Line 9809 – Legal and accounting fees Report the fees you incurred for external professional advice or services, including consulting fees.

You can report accounting and legal fees you incur to get advice and help in keeping your records. You can also report fees you incur for preparing and filing your income tax and GST/HST returns.

You can report accounting or legal fees you paid to have an objection or appeal prepared against an assessment for income tax, Canada Pension Plan or Quebec Pension Plan contributions, or employment insurance premiums. However, the full amount of these deductible fees must first be reduced by any reimbursement of these fees you have received. Enter the difference on line 23200 of your income tax return. If you received a reimbursement in 2019 for the types of fees you deducted in a previous year, enter the amount you received on line 13000 of your 2019 income tax return.

You cannot report legal and other fees you incur to buy capital property, such as land, buildings, and equipment. Add these fees to the cost of the property. For more information on capital property, see Chapter 6.

For more information, see Interpretation Bulletin IT-99, Legal and Accounting Fees.

Line 9810 – Property taxes Enter the amount of land, municipal, and realty taxes you paid for property used in your farming business. Since the municipal tax for the farmhouse is a personal expense, you cannot report it unless you meet the conditions explained in “Business-use-of-home expenses” on page 38.

If you are repaying a loan for land drainage through your property tax payments to your township, you cannot include the amount you repaid as part of your property tax expense.

Line 9811 – Rent (land, buildings, pastures) Enter the amount of rent you paid for land, buildings, and pastures you used for your farming business.

If you farmed in a crop share and paid your landlord a share of the crop, only include your share of the crop in your income and expenses.

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Line 9816 – Non-arm’s length salaries Keep a detailed record of the amounts you paid to each related person. For a definition of related persons, see “Line 9815 – Arm’s length salaries” on page 41.

As the employer, you must deduct your part of CPP or QPP contributions and employment insurance premiums. You can also deduct workers’ compensation amounts payable on employees’ remuneration and Provincial Parental Insurance Plan (PPIP) premiums. The PPIP is an income replacement plan for residents of Quebec. For details, contact Revenu Québec. For information on making payroll deductions, go to canada.ca/payroll.

Do not deduct the amounts you withheld from remuneration, since you already deducted them in the amount you claimed as wages. Do not include the cost of board.

The terms “salaries” and “wages” are used interchangeably in the description of this non-allowable expense.

You can deduct the wages you paid to your child, as long as you meet all of these conditions:

■ you paid the wages by cheque, in cash or in kind

■ the work your child did was necessary for you to earn farm income

■ the wages were reasonable when you consider your child’s age

■ the amount you paid is what you would have paid someone else to do the same work

Keep documents to support the wages you paid to your child. If you paid your child by cheque, keep the cancelled cheque. If you paid cash, have your child sign a receipt.

If you paid wages in kind to non-arm’s length employees (including your spouse or children), report such wages in the same manner that is described at “Line 9815 – Arm’s length salaries” on page 41.

You can deduct wages you paid to your spouse or common-law partner, as long as that person is not a partner in your business and you follow the same rules that apply to wages paid to your child.

If you were a partner of a farm partnership that employed your or your partner’s spouse or common-law partner, the farm partnership can deduct that person’s wages if it incurred the expense to earn farming income and the wages were reasonable.

Line 9819 – Motor vehicle expenses Business use of a motor vehicle or passenger vehicle (including zero-emission vehicles and zero-emission passenger vehicles) If you use your motor vehicle or a passenger vehicle for personal and business use, you can deduct only the part of the expenses you paid to earn farming income. Farming business use includes things such as trips to pick up parts and farm supplies, or to deliver grain. You can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your motor vehicle or passenger vehicle. If you did not live on your farm, the travel between the farm and your home is not considered business travel.

To support the amount you can deduct, keep a record of the total kilometres you drive and the kilometres you drive to earn income. Also, keep track of what it costs you to run and maintain the motor vehicle for your fiscal period.

What type of vehicle do you own? The kind of vehicle you own can affect the expenses you can deduct. For income tax purposes, you should know the definitions of motor vehicles, zero-emission vehicles, passenger vehicles, and zero-emission passenger vehicles.

A motor vehicle is an automotive vehicle designed or adapted for use on highways and streets. A motor vehicle does not include a trolley bus or a vehicle designed or adapted to be operated only on rails.

A zero-emission vehicle and a zero-emission passenger vehicle are motor vehicles. For more information on these types of vehicles, see their definitions on page 72.

A passenger vehicle is a motor vehicle that is owned by the taxpayer (other than a zero-emission vehicle) or that is leased, and is designed or adapted primarily to carry people on highways and streets. It seats a driver and no more than eight passengers. Most cars, station wagons, vans, and some pick-up trucks are passenger vehicles.

Passenger vehicles and zero-emission passenger vehicles are subject to limits on the amount of CCA, interest, and leasing cost that may be deducted. They do not include:

■ an ambulance

■ a clearly marked police or fire emergency response vehicle

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■ a motor vehicle you bought to use more than 50% as a taxi, a bus used in the business of transporting passengers, or a hearse used in a funeral business

■ a motor vehicle you bought to sell, rent, or lease in a motor vehicle sales, rental, or leasing business

■ a motor vehicle (except a hearse) you bought to use in a funeral business to transport passengers

■ a van, pick-up truck, or similar vehicle that seats no more than the driver and two passengers and that, in the tax year you bought or leased it, was used more than 50% to transport goods and equipment to earn income

■ a van, pick-up truck, or similar vehicle that, in the tax year you bought or leased it, was used 90% or more to transport goods, equipment, or passengers to earn income

■ a pick-up truck that, in the tax year you bought or leased it, was used more than 50% to transport goods, equipment, or passengers to earn or produce income at a remote work location or at a special work site that is at least 30 kilometres from the nearest community with a population of at least 40,000

■ a clearly marked emergency medical service vehicle used to carry paramedics and their emergency medical equipment

If you own a passenger vehicle or a zero-emission passenger vehicle (ZEPV), or you lease a passenger vehicle or a passenger vehicle that would otherwise qualify as a ZEPV, there may be a limit on the amounts you can deduct for CCA, interest, and leasing costs.

The following chart will help you to determine if you have a motor vehicle or a passenger vehicle. The chart does not cover every situation, but it gives some of the main definitions for vehicles bought or leased and used to earn self-employment income.

Vehicle definitions

Type of vehicle Seating

(includes driver) Business use in year

bought or leased Vehicle definition

Coupe, sedan, station wagon, sports car, or luxury car 1 to 9 1% to 100% passenger

Pick-up truck used to transport goods or equipment 1 to 3 more than 50% motor

Pick-up truck (other than above) 1 to 3 1% to 100% passenger

Pick-up truck with extended cab used to transport goods, equipment, or passengers 4 to 9 90% or more motor

Pick-up truck with extended cab (other than above) 4 to 9 1% to 100% passenger

Sport-utility used to transport goods, equipment, or passengers 4 to 9 90% or more motor

Sport-utility (other than above) 4 to 9 1% to 100% passenger

Van or minivan used to transport goods or equipment 1 to 3 more than 50% motor

Van or minivan (other than above) 1 to 3 1% to 100% passenger

Van or minivan used to transport goods, equipment, or passengers 4 to 9 90% or more motor

Van or minivan (other than above) 4 to 9 1% to 100% passenger

Do not include any of the following:

■ interest on the money you borrow for a motor vehicle

■ leasing costs for a motor vehicle

■ the capital cost allowance (CCA)

For more information on interest and leasing costs, see “Line 9829 – Motor vehicle interest and leasing costs” on page 51. For more information on CCA, see Chapter 5.

Example Murray’s farming business has a December 31 year-end. He owns a truck that is not a passenger vehicle. He uses the truck to pick up supplies and equipment. Murray kept the following records for his 2019 fiscal period:

Farming business kilometres 27,000 km Total kilometres . 30,000 km

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Expenses: Gasoline and oil $ 3,500 Repairs and maintenance $ 500 Insurance $ 1,000 Licence and registration fees $ 100 Total expenses for the truck $ 5,100

This is how Murray determines the motor vehicle expenses he can deduct in his 2019 fiscal period:

27,000 (farming business kilometres) 30,000 (total kilometres)

× $5,100 = $4,590

Murray enters $4,590 on line 9819 of the form as motor vehicle expenses in his 2019 fiscal period. He calculates and deducts the interest on the loan to buy his truck separately on line 9829.

Note You may have received insurance proceeds to pay for the cost of repairs. If the insurance proceeds compensated you for damages to a motor vehicle for which you claimed CCA, and you used all of them to repair the vehicle within a reasonable period of time, claim a deduction for the amount spent on repairs on line 9819. You must also include the insurance proceeds as income on line 9600. If you did not spend all the insurance proceeds on repairs within a reasonable length of time, include the remainder as proceeds of disposition in column 5 of Area A, “Calculation of capital cost allowance (CCA) claim,” on form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses. For more information, see “Column 5 – Proceeds of dispositions in the year” on page 76.

For more information on motor vehicle expenses, see Interpretation Bulletin IT-521, Motor Vehicle Expenses Claimed by Self-Employed Individuals.

Simplified logbook for motor vehicle expense provisions Following a Federal initiative to reduce the paper burden on businesses, you can choose to maintain a full logbook for one complete year to establish a base year’s business use of a vehicle.

After one complete year of keeping a logbook to establish the base year, you can use a three month sample logbook to extrapolate business use for the entire year, as long as the usage is within the same range (within 10%) of the results of the base year. Businesses will have to show that the use of the vehicle in the base year remains representative of its normal use.

More than one vehicle If you use more than one motor vehicle or passenger vehicle for your business, for each vehicle keep a separate record that shows the total personal use kilometres and business kilometres you drive, as well as the cost to run and maintain each vehicle. Calculate each vehicle’s expenses separately.

For more information, see Interpretation Bulletin IT-521, Motor Vehicle Expenses Claimed by Self-Employed Individuals.

Line 9820 – Small tools If a tool costs you less than $500, you can report its full cost. If it costs you $500 or more, add the cost to your CCA charts on form T1175 as Class 8 property.

Small tools that cost less than $500 are fully deductible in the year you buy them. You may claim them as an expense at line 9820 or claim CCA by including them in Class 12 (with a CCA rate of 100%). Either method is acceptable, but do not claim the amount twice. For more information on CCA, see Chapter 5.

Line 9821 – Soil testing Enter the amount of expenses you paid for testing soil samples.

Line 9823 – Licences/permits Enter the total of annual licence and permit fees that you paid to run your business.

Line 9824 – Telephone Do not deduct the basic monthly rate of your home telephone. However, you can deduct any long-distance telephone calls you made on your home telephone for farming business purposes.

If you have a separate telephone to use in your business and you use it for business calls only, you can deduct its basic monthly rate.

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Line 9825 – Quota rental (tobacco, dairy) Enter the amount of expenses you paid for quota rentals in the fiscal period.

Line 9826 – Gravel Enter the amount of expenses you paid for gravel used to earn farming income in the fiscal period.

Line 9827 – Purchases of commodities resold Enter purchases of commodities that you bought for resale and then sold. Enter the corresponding sales of commodities purchased for resale on “Line 9612 – Resales of commodities purchased.”

Enter purchases of commodities that you bought for resale but have not yet sold.

Line 9829 – Motor vehicle interest and leasing costs Enter the leasing costs for your motor vehicle or the interest on the money you borrowed for a motor vehicle.

If you used a passenger vehicle (see the definition on page 48) or a zero-emission passenger vehicle to earn farming income, there is a limit on the amount of interest you can deduct. Whether you use the cash or accrual method to determine your income, fill in the following chart to calculate the interest you can deduct. If you used your passenger vehicle or zero-emission passenger vehicle for both personal and farming business use, fill in the chart before you determine how much interest you can deduct as an expense.

Interest chart

Enter the total interest you paid (cash method) or that is payable (accrual method) in your fiscal period $ A

$10* × ______, number of days in your fiscal period for which interest was paid or payable $ B

Your available interest expense is either A or B, whichever amount is less $

* For passenger vehicles bought: from September 1, 1989, to December 31, 1996, and from 2001 to 2019, use $10; and from 1997 to 2000, use $8.33.

Example Heather’s farming business has a December 31 year-end. On January 1, 2019, she bought a new passenger vehicle that she uses for both personal and business use. She borrowed money to buy the vehicle, and the interest she paid in her 2019 fiscal period was $2,200. Since the car Heather bought is a passenger vehicle, there is a limit on the interest she can deduct.

Heather’s available interest is either of these two amounts, whichever is less:

■ $2,200 (the total interest she paid in her 2019 fiscal period)

■ $3,650 ($10 × 365 days)

Heather drove 20,000 kilometres on farming business out of the total 25,000 kilometres she drove in her 2019 fiscal period. Here is how Heather determines the motor vehicle interest expenses she can deduct for her 2019 fiscal period:

20,000 (farming business kilometres) 25,000 (total kilometres)

× $2,200 = $1,760

Heather enters $1,760 on line 9829, as motor vehicle interest for her 2019 fiscal period.

Leasing costs for a passenger vehicle (or a vehicle that would qualify as a zero-emission passenger vehicle if you owned it) You can report costs you incur to lease a passenger vehicle you use to earn income. Include these amounts on line 9819.

When you use a passenger vehicle to earn farming business income, there is a limit on the amount of the leasing costs you can deduct. This limit does not apply to zero-emission passenger vehicles. To calculate your eligible leasing costs, fill in the “Eligible leasing costs for passenger vehicles” chart.

If the lease agreement for your passenger vehicle includes items such as insurance, maintenance, and taxes, include them as part of the lease charges on line 1 when you fill in the chart.

Note Generally, leases include taxes (GST/HST or PST), but not items such as insurance and maintenance. You have to pay these amounts separately. Include the taxes at line 1 of the chart, and list the items like insurance and maintenance on the appropriate lines on form T1273.

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For your 2019 fiscal period, use the GST rate of 5% or the applicable HST rate of your specific province to fill in the chart below.

The following example shows how to calculate the eligible leasing costs. In this chart, we use prescribed amounts. Prescribed means it is written in the law.

Example On July 1, 2019, Meadow started leasing a car that is a passenger vehicle. She used the car to earn farming income. Her business has a December 31 fiscal year-end. The PST rate for her province is 8% and GST is 5%.

Meadow entered the following for 2019:

Monthly lease payment ................................................................................................................................. $ 500 Lease payments for 2019 ............................................................................................................................... $ 3,000 Manufacturer’s suggested list price ............................................................................................................ $ 33,000 Number of days in 2019 she leased the car ................................................................................................ 184 Prescribed CCA capital cost limit ................................................................................................................ $ 30,000 Prescribed CCA capital cost limit × Prescribed limit rate: 30,000 × (100 ÷ 85) .................................... $ 35,294 Prescribed deductible leasing costs limit ................................................................................................... $ 800 GST and PST on $30,000 ................................................................................................................................ $ 3,900 GST and PST on $35,294 ................................................................................................................................ $ 4,588 GST and PST on $800 ..................................................................................................................................... $ 104 Total lease charges incurred in 2019 fiscal period for the vehicle .......................................................... $ 3,000 1 Total lease payments deducted in fiscal periods before 2019 for the vehicle ...................................... $ 0 2 Total number of days the vehicle was leased in 2019 and previous fiscal periods ............................. 184 3 Manufacturer’s list price ............................................................................................................................... $ 33,000 4 The amount on line 4 or $39,882 ($35,294 + $4,588), $39,882 × 85%, whichever is more ................... $ 33,900 5 ($904 × 184) ÷ 30 ............................................................................................................................................. $ 5,545 6 ($33,900 × $3,000) ÷ $33,900 .......................................................................................................................... $ 3,000 7

Meadow’s eligible leasing cost is either line 6 or 7, whichever amount is less. In this case, her allowable claim is $3,000.

Eligible leasing costs for passenger vehicles

Total lease charges incurred in your 2019 fiscal period for the vehicle .......................................................................... $ 1

Total lease payments deducted before your 2019 fiscal period for the vehicle .............................................................. $ 2

Total number of days the vehicle was leased in 2019 and before 2019 ......................................................................... 3

Manufacturer’s list price .................................................................................................................................................. $ 4

The amount on line 4 or ($35,294 + GST* and PST*, or $35,294 + HST*), $ × 85% = ................................ $ 5 whichever is more

[($800 + GST* and PST*, or $800 + HST*) × line 3] $ – line 2: $ = ......................................... $ 6 30

[($30,000 + GST* and PST*, or $30,000 + HST*) × line 1] = ......................................................................................... $ 7 line 5

Eligible leasing cost: Line 6 or line 7, whichever is less .......................................................................................... $

* Use a GST rate of 5% or the HST rate applicable to your province.

Repayments and imputed interest When you lease a passenger vehicle, you may have a repayment owing to you, or you may have imputed interest. If so, you will not be able to use the chart.

Imputed interest is interest that would be owing to you if interest were paid on the money you deposited to lease a passenger vehicle. Calculate imputed interest for leasing costs on a passenger vehicle only if all of the following apply:

■ one or more deposits were made for the leased passenger vehicle

■ one or more deposits are refundable

■ the total of the deposits is more than $1,000

For more information, see Interpretation Bulletin IT-521, Motor Vehicle Expenses Claimed by Self-Employed Individuals.

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Joint ownership of a passenger vehicle or a zero-emission passenger vehicle If you and another person own or lease a passenger vehicle or zero-emission passenger vehicle, the limits on CCA, interest, and leasing costs still apply. If you and another person own or lease a zero-emission passenger vehicle, only the limits on CCA and interest apply. The total amount you (as a joint owner) or any other owners deduct cannot be more than the amount one person owning or leasing the vehicle could deduct.

Line 9936 – Capital cost allowance Enter the amount of CCA you calculate on all the eligible assets used in your farming operation. To calculate your CCA claim, use the charts on form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses. For information on how to fill in these charts, see Chapter 5.

Line 9937 – Mandatory inventory adjustments – prior year If you included an amount for the mandatory inventory adjustment (MIA) on line 9942 in your 2018 fiscal period, enter the amount as an expense on line 9937 in your 2019 fiscal period. Do not include the valuation of inventories if you are using the accrual method of accounting. For information about the accrual method, see “Reporting methods” on page 9.

For more information on MIA, see “Line 9942 – Mandatory inventory adjustment – current year” on page 54.

Line 9938 – Optional inventory adjustments – prior year If you included an amount for the optional inventory adjustment (OIA) on line 9941 in your 2018 fiscal period, deduct the amount as an expense on line 9938 in your 2019 fiscal period. Do not include the valuation of inventories if you are using the accrual method of accounting. For information about the accrual method, see “Reporting methods” on page 9.

For more information on OIA, see “Line 9941 – Optional inventory adjustment – current year” on page 53.

Line 9896 – Other (specify) The expenses listed on the form are only the most common ones. If you have other farming expenses that are not listed on this form and are non-allowable for AgriStability, enter the total amount on line 9896. Then list the items on the blank lines provided under line 9896. For more information about other expenses, see guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Enter any overpayments you repaid for any of the programs identified on lines 9540 and 9544.

Summary of expenses Copy Totals C, D, and E from the bottom of each of the three tables in the “Expenses” section of the form. Add the totals for your total expenses.

Summary of income and expenses Line 9959 – Gross farming income Enter your gross farming income from line 9959 to line 14099 of your income tax return. If you also completed form T1274, add the totals from line 9959 on your form T1273 and all your T1274 forms. Enter the result on line 14099 of your income tax return.

Line 9969 – Net income (loss) before adjustments If you are a partner of a partnership, this amount is the net farming business income of the partnership. If the amount is negative, enter the amount in brackets.

Line 9940 – Other deductions You can enter any business-use-of-home expenses that you are carrying forward from a previous fiscal period, as long as you meet one of the following conditions:

■ the workspace is your principal place of business

■ you use the space only to earn your farming business income, and you use it on a regular, ongoing basis to meet your customers

For more information, see “Line 9934 – Adjustment to business-use-of-home expenses” on page 58.

Line 9941 – Optional inventory adjustment – current year If you want to include an inventory amount in income, read this section.

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By making the optional inventory adjustment (OIA), you can include in your income an amount up to the fair market value (FMV) of your inventory minus the mandatory inventory adjustment (MIA). You can only make the OIA if you use the cash method. For the meaning of inventory and FMV, see “Line 9942 – Mandatory inventory adjustment – current year.”

For the OIA, unlike for the MIA, the inventory does not have to be purchased inventory. It is the entire inventory you still have at the end of your 2019 fiscal period.

Enter the amount of your OIA on line 9941. You must deduct this amount as an expense in your next fiscal period.

Line 9942 – Mandatory inventory adjustment – current year The mandatory inventory adjustment (MIA) decreases your net loss if you held inventory at the end of your fiscal period. Read this section even if you do not have to make the MIA. This section will show you how to determine the value of the farm inventory you bought and still have at the end of your 2019 fiscal period. You will need to know this value if you have to make the MIA this year or in the future.

You have to make the MIA if all of the following apply:

■ you use the cash method to report your income

■ you have a net loss on line 9969 of the form

■ you bought inventory and still have it at the end of your 2019 fiscal period. This does not refer only to inventory you bought in 2019. It includes inventory you had previously bought and still owned at the end of your 2019 fiscal period

Your MIA is the lesser of these two amounts:

■ the net loss before adjustments on line 9969

■ the value of the purchased inventory you still have at the end of your 2019 fiscal period

To calculate your MIA, fill in Charts 1, 2, 3, and 4 on page 140. Once you have filled in Chart 4, enter the amount on line 9942. For more information, see Interpretation Bulletin IT-526, Farming – Cash method inventory adjustments.

In your next fiscal period, deduct from your farming income the MIA you add to your net loss in your 2019 fiscal period.

Note If you bought a specified animal (as defined below) in a non-arm’s length transaction (see the definition on page 71), we consider that you bought the animal in the same year and at the same price for which the seller bought it. A non-arm’s length transaction is, for example, a transaction between members of a family, such as a husband and wife, or a parent and child.

To value your inventory, you need to know the meaning of the following terms:

Inventory is a group of items that a business holds and intends to consume or sell to its customers.

Farm inventory is tangible property that is:

■ held for sale, such as harvested grain

■ used in the production of saleable goods, such as seed and feed

■ in the process of being produced, such as standing crops or feeder livestock

Seed you have already planted and fertilizer or chemicals you have already applied are no longer part of your inventory items but are included in the value of the standing crops that may be included in the OIA.

Purchased inventory is inventory you have bought and paid for.

Specified animals are horses. You may also elect to designate cattle you registered under the Animal Pedigree Act as specified animals. To make this choice, put a note on your income tax return saying you want to designate the animal this way. If you indicate on your return that it is a specified animal, we will continue to consider it as such until you sell it.

Cash cost is the amount you paid to buy your inventory.

Fair market value (FMV) is generally the highest dollar value you can get for your property in an open and unrestricted market between an informed and willing buyer and an informed and willing seller who are dealing at arm’s length (see the definition on page 71) with each other.

Value of your purchased inventory To value your purchased inventory, read the text that follows and the example of how to fill in the MIA charts. There are blank charts for you to use on page 140 of this guide. Keep these charts as part of your records.

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Except for specified animals, you have to value any purchased inventory you bought before or during your 2019 fiscal period at the lesser of these amounts:

■ the cash cost

■ the FMV

To determine which amount is less, compare each item or group of items separately in the inventory.

Value the specified animals you acquired in your 2019 fiscal period and still have at the end of this period at one of the following amounts:

■ the cash cost

■ 70% of the cash cost

■ any amount between these two amounts

Value the specified animals you acquired before your 2019 fiscal period and still have at the end of this period at one of the following amounts:

■ the cash cost

■ 70% of:

– the value of the specified animals for MIA purposes as determined at the end of your 2018 fiscal period, plus

– any amounts you paid in your 2019 fiscal period toward the purchase price

■ any amount between these two amounts

Example Doug started his farming business in 2016 and uses the cash method to report his income. His year-end is December 31. Doug shows a net loss of $55,000 in 2019 on line 9969. Doug has purchased inventory at the end of his 2019 fiscal period. This means he has to decrease his net loss by the MIA. Doug made a chart for the cash cost of his livestock that is purchased inventory at the end of his 2019 fiscal period.

Livestock

Year of purchase Cost of purchase Amount Doug paid by the end of his 2019 fiscal period

2019 $30,000 $25,000

2018 $26,000 $26,000*

2017 $22,000 $22,000

2016 $20,000 $20,000

* For livestock bought in his 2018 fiscal period, Doug paid $19,000 in 2018 and $7,000 in 2019.

Doug’s other inventory is fertilizer, seed, and fuel. The cash cost is the same as the fair market value for this inventory. Its value is as follows:

■ $15,000 bought in his 2019 fiscal period

■ $6,000 bought in his 2018 fiscal period

■ $5,000 bought in his 2017 fiscal period

At the end of his 2019 fiscal period, Doug did not have any other inventory that he bought before his 2016 fiscal period.

Doug has registered his livestock under the Animal Pedigree Act. He wants to designate these animals as specified animals.

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Doug fills in Chart 1 as follows:

Chart 1 Cash cost of purchased inventory

Doug enters the amount he paid by the end of his 2019 fiscal period for the specified animals he bought:

Fiscal period Cash cost

in his 2019 fiscal period $ 25,000 1

in his 2018 fiscal period $ 26,000 2

in his 2017 fiscal period $ 22,000 3

in his 2016 fiscal period $ 20,000 4

before his 2016 fiscal period $ 0 5

Doug enters the amount he paid by the end of his 2019 fiscal period for all other inventory he bought:

in his 2019 fiscal period $ 15,000 6

in his 2018 fiscal period $ 6,000 7

in his 2017 fiscal period $ 5,000 8

in his 2016 fiscal period $ 0 9

before his 2016 fiscal period $ 0 10

Doug now knows the cash cost of his purchased inventory, including his specified animals. He uses these amounts to calculate the value of his purchased inventory at the end of his 2019 fiscal period. To do this, he fills in Charts 2, 3, and 4 as follows:

Chart 2 Value of purchased inventory for specified animals

The small letters in front of each line match the paragraphs at the end of this chart. These paragraphs explain how Doug calculates the number on each line.

Inventory bought in his 2019 fiscal period Doug enters an amount that is not more than the amount on line 1, but not less than 70% of this amount a) $ 20,000 11

Inventory bought in his 2018 fiscal period Doug enters an amount that is not more than the amount on line 2, but not less than 70% of the total of the value at the end of his 2018 fiscal period, plus any amounts he paid in his 2019 fiscal period toward the purchase price b) $ 14,210 12

Inventory bought in his 2017 fiscal period Doug enters an amount that is not more than the amount on line 3, but not less than 70% of the total of the value at the end of his 2018 fiscal period, plus any amounts he paid in his 2019 fiscal period toward the purchase price c) $ 7,546 13

Inventory bought in his 2016 fiscal period Doug enters an amount that is not more than the amount on line 4, but not less than 70% of the total of the value at the end of his 2018 fiscal period, plus any amounts he paid in his 2019 fiscal period toward the purchase price d) $ 4,802 14

Inventory bought before his 2016 fiscal period e) $ 0 15

a) Doug chose $20,000, which is between the cash cost of $25,000 and $17,500 (70% of the cash cost).

b) Doug chose to value the inventory he bought in his 2018 fiscal period at 70% of the cash cost. Therefore, the value of this inventory at the end of his 2018 fiscal period was $13,300 ($19,000 × 70%). Remember, Doug paid $19,000 for these specified animals in 2018. He paid $7,000 in 2019.

For his 2019 fiscal period, Doug chose to value the inventory that he bought in his 2018 fiscal period at 70% of the total of the value at the end of the 2018 fiscal period plus any amounts that he paid in his 2019 fiscal period toward the purchase price. Therefore, the amount that he enters on line 12 is $14,210 [70% × ($13,300 + $7,000)]. He could choose any amount between the cash cost of $26,000 and the lowest acceptable inventory value of $14,210.

c) Doug chose to value the inventory that he bought in his 2017 fiscal period at 70% of the cash cost. Therefore, the value of this inventory at the end of his 2017 fiscal period was $15,400 ($22,000 × 70%).

For his 2018 fiscal period, Doug chose to value the inventory that he bought in his 2017 fiscal period at 70% of the total of the value at the end of his 2017 fiscal period. Therefore, the value of this inventory at the end of his 2018 fiscal period was $10,780 ($15,400 × 70%).

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For his 2019 fiscal period, Doug chose to value the inventory that he bought in his 2017 fiscal period at 70% of the total of the value at the end of his 2018 fiscal period. Therefore, the amount he enters on line 13 is $7,546 ($10,780 × 70%). He could choose any amount between the cash cost of $22,000 and the lowest acceptable inventory value of $7,546.

d) Doug chose to value the inventory that he bought in his 2016 fiscal period at 70% of the cash cost. Therefore, the value of this inventory at the end of his 2016 fiscal period was $14,000 ($20,000 × 70%).

For his 2017 fiscal period, Doug chose to value the inventory that he bought in his 2016 fiscal period at 70% of the total of the value at the end of his 2016 fiscal period. Therefore, the value of this inventory at the end of his 2017 fiscal period was $9,800 ($14,000 × 70%).

For his 2018 fiscal period, Doug chose to value the inventory that he bought in his 2016 fiscal period at 70% of the total of the value at the end of his 2017 fiscal period. Therefore, the value of this inventory at the end of his 2018 fiscal period was $6,860 ($9,800 × 70%).

For his 2019 fiscal period, Doug chose to value the inventory that he bought in his 2016 fiscal period at 70% of the total of the value at the end of his 2018 fiscal period. Therefore, the amount he enters on line 14 is $4,802 ($6,860 × 70%). He could choose any amount between the cash cost of $20,000 and the lowest acceptable inventory value of $4,802.

e) Doug had not purchased any specified animals before his 2016 fiscal period.

Chart 3 Value of purchased inventory for all other inventory

Inventory bought in his 2019 fiscal period: Doug enters the amount from line 6 or the fair market value, whichever is less $ 15,000 16

Inventory bought in his 2018 fiscal period: Doug enters the amount from line 7 or the fair market value, whichever is less $ 6,000 17

Inventory bought in his 2017 fiscal period: Doug enters the amount from line 8 or the fair market value, whichever is less $ 5,000 18

Inventory bought in his 2016 fiscal period: Doug enters the amount from line 9 or the fair market value, whichever is less $ 0 19

Inventory bought before his 2016 fiscal period: Doug enters the amount from line 10 or the fair market value, whichever is less $ 0 20

Chart 4 Calculation of MIA

Doug enters the amount of his net loss from line 9969 $ 55,000 21

Doug enters the value of his inventory from Charts 2 and 3:

■ the amount from line 11 $ 20,000

■ the amount from line 12 $ 14,210

■ the amount from line 13 $ 7,546

■ the amount from line 14 $ 4,802

■ the amount from line 15 $ 0

■ the amount from line 16 $ 15,000

■ the amount from line 17 $ 6,000

■ the amount from line 18 $ 5,000

■ the amount from line 19 $ 0

■ the amount from line 20 $ 0

Total value of inventory $ 72,558 $ 72,558 22

MIA – Doug enters the amount from line 21 or line 22, whichever is less $ 55,000 23

The MIA that Doug uses for his 2019 fiscal period will be the same amount that he deducts from his farming income when he calculates his income for his next fiscal period.

Enter the figure from line 23 of Chart 4 on line 9942 of form T1273.

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Partnership information – Your share of amount C Enter your share of amount C or the amount from your T5013 slip. Fill in the “Partnership information” chart on your form. For more information, see page 58.

Line 9934 – Adjustment to business-use-of-home expenses If you have claimed business-use-of-home expenses (including a carryforward from a previous year claimed on line 9940) in arriving at your net income (loss), and the amount on line 9944 is negative (a loss), you must make an adjustment on line 9934. Enter the lesser of the following amounts:

■ the expenses you claimed from the business use of your home, including current-year expenses and any expenses you are carrying forward from previous years

■ the amount of your loss on line 9944

This does not mean that you cannot use your claim for business-use-of-home expenses. In a future year, you can use any expense you could not deduct in your 2019 fiscal period, as long as you meet one of these conditions:

■ the workspace is your principal place of business

■ you use the space only to earn your farming business income, and you use it on a regular and ongoing basis to meet your customers

Use the chart on form T1175 to calculate your allowable claim for business-use-of-home expenses. Be sure to include any part of the CCA that you claimed for the business-use of your home.

For more information, see Income Tax Folio S4-F2-C2, Business Use of Home Expenses.

Line 9974 – GST/HST rebate for partners received in the year If you received a GST/HST rebate for partners, enter the amount of the rebate that relates to eligible expenses other than CCA on line 9974, in the section “Summary of income and expenses” of forms T1273 or T1274 in the year you receive the rebate.

In the chart “Partnership information,” show the full names of the other partners, as well their percentages of ownership shares in the partnership.

Line 9946 – Net farming income (loss) Enter your net farming income or loss on this line of your form. Also enter it on line 14100 of your return if:

■ your fiscal year-end is December 31, 2019

■ you did not file form T1139, Reconciliation of 2018 Business Income for Tax Purposes, with your 2018 income tax return

If you have more than one farming operation or additional expenses that apply to partnerships, add the amounts from line 9946 of form T1273 and form T1274. Enter the total of these amounts on line 14100 of your income tax return.

If you have a loss, enter the amount in brackets. For more information about losses, see Chapter 7.

You may have to adjust the figure from line 9946 before entering it on your income tax return. You may have filed form T1139, Reconciliation of 2018 Business Income for Tax Purposes, with your 2018 income tax return. If so, you may have to complete the same form for 2019. To find out if you have to file form T1139, and calculate the amount of income to report on your 2019 income tax return, see form T1139, Reconciliation of 2019 Business Income for Tax Purposes.

Partnership information chart Partnership name Enter the partnership’s name.

Your percentage of the partnership Fill in this chart if you are a partner in a partnership.

Enter your own percentage share of the partnership.

Fill in all other partners’ information on the lines below.

AgriStability and AgriInvest Participant Identification Number (PIN) Enter the PIN (if available) for each individual partner, corporate or co-operative partner.

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Partners’ names Fill in the first and last names of each individual partner. If a corporation or co-operative is a partner, enter the name of the corporation or co-operative. If another partnership is a partner, list the names of the partners in that partnership.

Percentage (%) share Enter each partner’s percentage share based on the allocation of partnership net income or loss reported to us unless one of the following conditions is met:

■ interest has been paid on the partners’ capital

■ salaries have been paid to partners

In these cases, exclude these amounts when you determine the partner’s percentage share.

If another partnership is a partner, determine the beneficial ownership of each individual partner. See the following example.

Example The Fred and Mary Smith Partnership (a 50/50 partnership) owns 60% of the Sunny Skies Partnership. Therefore, Fred and Mary Smith would each have a 30% beneficial ownership in the Sunny Skies Partnership.

Chapter 4 – Inventories, purchased inputs, deferrals, receivables and payables

For AgriStability participants In addition to completing pages 1 to 5, you must fill in page 7 of form T1273 to participate in AgriStability.

Fill in only the areas that apply to your farming operation. If you have additional farming operations, also complete form T1274.

If you file to the CRA on the accrual basis, you do not need to fill in the following parts of this form:

■ the “End of year price” column for the “Crop inventory valuation and productive capacity” and “Livestock inventory valuation” sections

■ the “Purchased inputs,” “Deferred income and receivables,” and “Accounts payable” sections

Read the instructions below for further details.

If there are not enough lines on the form to provide all of your information, attach a second copy of the page to your form, with the rest of the information on it.

AgriStability program codes You will need to refer to the following code lists to fill in page 7 of the form. These lists can change from year to year so it is important to check each year for the right code.

■ Inventory code list (page 109): Includes the codes and descriptions of the commodities to fill in the “Crop inventory valuation and productive capacity” and “Livestock inventory valuation” sections of the form.

■ Units of measurement code list (page 135): Includes the unit of measurement codes (for example tonnes or bushels) to fill in your “Crop inventory valuation and productive capacity” section of the form.

■ Expense code list (page 135): Includes the codes and descriptions of the allowable expenses to fill in the “Purchased inputs” and “Accounts payable” sections of the form.

■ Commodity list (page 104): Includes the codes and descriptions of commodities to fill in the “Purchased inputs,” “Deferred income and receivables,” and “Accounts payable” sections of the form.

■ Program payment lists (pages 107 and 108): Includes the codes and descriptions of program payments to fill in “Deferred income and receivables” section of the form.

■ Productive capacity list (page 136): Includes the codes and units used to fill in “other” commodities not listed in the “Livestock productive capacity” section of the form.

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Commodities with published prices You are not required to provide End of year prices (EYPs) in the “Crop inventory valuation and productive capacity” and “Livestock inventory valuation” sections of the form if the commodities you report are marked by an “X” on the “Inventory code list” for your province or territory.

We develop prices for commodities marked with an “X” using information from:

■ Statistics Canada

■ Agriculture and Agri-Food Canada (AAFC)

■ provincial agricultural departments

■ commodity organizations

The prices are published in the AgriStability Price List. We use these prices to value your inventory. You can request this list from us or find it on the program website.

If you do not feel these prices are appropriate for your farm, you may use your own prices if you can show that either your:

■ commodity is substantially different from the commodity listed

■ method of marketing the commodity was substantially different from the general marketing practice

In either of these cases, you may use prices based on sales or purchases of the specific commodity:

■ in your name

■ occurring within 30 days either before or after your fiscal year-end

To use your own prices, send copies of receipts or documents that support your prices to your Administration. Send this information at the same time you send your form to the Winnipeg Tax Centre, or within your adjustment time frame. For more information on adjustments, see “Adjustments” on page 20.

We will determine if the prices are reasonable for your commodity.

Commodities with unpublished prices You must provide End of year prices (EYPs) for the crop and livestock inventories that are shaded on the “Inventory code list” (for your province or territory). Base your prices on either:

■ the estimated market prices at year-end

■ sales or purchases within 12 months before or after your fiscal year-end

You are not required to provide documentation to support these prices for unpublished commodities. However, if you do, it will increase the chances of your price being accepted.

Supporting documentation includes either:

■ receipts from sales or purchases of the commodity

■ commodity specific price information from appropriate commodity marketing agencies

Send your supporting documentation to your Administration at the same time you send your forms to the Winnipeg Tax Centre or within your adjustment time frame. For more information on adjustments, see “Adjustments” on page 20.

We will determine if the prices are reasonable for your commodity.

Has the productive capacity of this operation decreased during the program year due to disaster circumstances? Tick “Yes” if the productive capacity of your farm decreased due to disaster circumstances during the program year. A decrease in productive capacity means a decrease in the overall amount that you produced.

For example, tick “Yes” if CFIA ordered your livestock destroyed due to disease or if you could not seed or harvest some or all of your land because of extreme wet or dry conditions.

If you participated in crop or production insurance in the program year for this operation, provide the Contract or Identification numbers. If you participated in AgriInsurance (crop or production), including hail insurance, provide your contract or identification numbers related to the crops listed in the “Crop inventory valuation and productive capacity” section.

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Crop inventory valuation and productive capacity Fill in this section if you either:

■ produced or seeded crops or forage with the expectation of harvest during the program year

■ had unseedable acres in the program year

■ carried over crops or forage in your inventories from your previous fiscal period

This part of the form is used to:

■ measure the change in your crop and forage inventory from the ending amount you reported in 2018 to the ending amount in the 2019 program year

■ show that you have completed a production cycle

■ adjust your reference margins if you had a structural change

To help you fill in this section, refer to your:

■ crop production records

■ sales and feeding records

■ crop insurance measurements

■ inventory records

How to fill in the columns Code and Crop/Grade Use the “Inventory code list” to report all commodities by code and description that you either:

■ produced

■ had on hand at the end of your fiscal period

■ planned to produce but could not because your land was too wet or too dry

Enter each grade or variety of crop separately. For example, enter #1 CWRS wheat separately from #2 CWRS wheat. Leave the code blank if the commodity is not listed in the “Inventory code list.”

Units Use the “Units of measurement code list” to enter the code used to measure your production. Fill in your “Quantity produced” and “Ending inventory” using the same unit of measurement.

Acres Enter the number of acres used to produce each crop. Report only those acres that produced or should have produced a crop during your 2019 fiscal period.

If you had unseedable acres (too wet or too dry), enter them in the “Unseedable acres” column.

Enter all summerfallow, pasture and wasteland acres on the designated lines.

For commodities not measured in acres, use the unit of measurement that is standard for the commodity.

Example Greenhouse and nursery operations (including floriculture) report in square metres, based on the productive area.

Maple syrup operations report in hundreds of taps producing. For example, if you have 350 taps producing, you enter 3.5 (350 ÷ 100 = 3.5).

Unseedable acres Report acres you planned to seed for each commodity that should have produced a crop but did not because the land was too wet or too dry.

Example At the beginning of the year, you planned to grow canola on 300 of your acres. However, you only seeded 200 acres because of flooding. In your crop inventory, enter 200 acres of canola and 100 unseedable acres of canola.

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If you planned to produce multi-stage crops, enter the unseedable acres for each multi-stage commodity you planned to seed in the program year.

Quantity produced Enter the quantity of crop you produced in the program year.

Ending Inventory Enter the quantity of crop you had at the end of your 2019 fiscal period.

End of year price Provide an End of year price (EYP) to value crops that are shaded on the “Inventory code list” for your province or territory.

Leave this column blank if your commodity is marked with an “X” on the “Inventory code list” for your province or territory, unless you meet the conditions to use your own price. For more information, see “Commodities with published prices” on page 60.

Do not fill in this column if you file to the CRA on the accrual basis.

Crops or forage carried over from 2018 but no longer seeded or produced in 2019 If you had inventory at the end of your 2018 fiscal period for a commodity you did not produce in 2019:

■ fill in the “Code,” “Crop/Grade,” and “Units” columns

■ enter “0” in the “Acres” and “Quantity produced” columns

■ enter ending inventory in the “Ending inventory” column if you are carrying the inventory over to your 2020 fiscal period

Landlords/tenants If you are a tenant in a crop share, or a landlord in a joint venture crop share, report your share of the acres and quantities.

Example You rent 300 acres in a crop share agreement. You receive 2/3 of the crop and pay 2/3 of the allowable expenses. Your landlord receives the remaining 1/3 of the crop and pays 1/3 of the allowable expenses. In 2019, the rented land produced 300 tonnes of wheat.

You enter your 2/3 share of both the acreage and the production:

■ 200 acres

■ 200 tonnes of wheat

Your landlord enters his 1/3 share of both the acreage and the production:

■ 100 acres

■ 100 tonnes of wheat

Commodity pools If you sold commodities into a pool, enter the full value of your commodity even if you only received a portion of the payment in your 2019 fiscal period.

Use code 4020, “Expected grains and oilseeds pool payments,” to enter any payments you received or expect to receive for your commodity after your 2019 fiscal period as a receivable in the “Deferred income and receivables” section of the form.

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Example In 2019 you sold 10 tonnes of wheat through G3 Canada Limited. You received initial and adjusted pool payments of $2,554.50 in 2019, and estimate that the final payment you will receive in 2020 will be $645.50.

Enter:

■ $2,554.50 as a wheat sale using code 056

■ $645.50 in the “Deferred income and receivables” section using code 4020, “Expected grains and oilseeds pool payments”

Perishable horticulture crops A perishable horticulture or floriculture crop:

■ spoils or decays easily

■ cannot be stored for periods longer than 10 months, such as potatoes, apples, or carrots

Perishable horticulture crops are adjusted on an accounts receivable basis, not on an inventory valuation basis.

Enter only the “Quantity produced” from your 2019 fiscal period. Do not report ending inventories or production from your previous fiscal period.

Enter any income from the sales of 2019 crops that you will receive in your 2020 fiscal period in the “Deferred income and receivables” section.

Swath grazing If you use swath grazing as a management practice, use code 5588 to enter the number of acres you used for swath grazing. Enter your production (in tonnes) and any swath remaining at the end of your fiscal period as ending inventory.

Organic production Report your crop as “organic” only if it has been Certified Organic. We may ask for your organic certification.

Unharvestable acres If you grew a commodity and expected to harvest it in the program year but could not for reasons beyond your control, enter the commodity, acres and a “0” as the total production.

Snowed-under crops If you could not harvest some or all of your crop at the end of your fiscal period because it was snowed under, enter the:

■ total acres for the crop using the inventory code for that crop

■ estimated production that you may be able to harvest next year

Then use code 6826, “Harvest discount allowance,” to enter all of the commodities that were snowed under.

Example You seeded 350 acres; 100 acres of canola and 250 acres of barley. You harvested 80 of your canola acres and 200 of your barley acres before the remainder of your crops were snowed under. Enter:

■ 100 acres for canola

■ 250 acres for barley

■ the amount you harvested from those acres

Enter the remaining 70 acres as snowed under using code 6826, “Harvest discount allowance.”

350 seeded acres – 80 acres of harvested canola – 200 acres of harvested barley 70 acres snowed under

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Standing crops If your farm always has a standing crop at the end of your fiscal period (for example, July 31), do not report the standing crop.

If your farm has an unexpected standing crop because you could not harvest it before the end of your fiscal period, include the standing crop in inventory.

Report the total acres for each crop you grew using the inventory codes for the commodity. Then use code 6826, “Harvest discount allowance,” to enter the total acreage of all commodities that had standing crop at your fiscal year-end.

Example You had 400 acres seeded to flax. You were only able to harvest 250 of these acres before your fiscal year-end, leaving you with 150 acres still standing.

400 acres of flax – 250 acres harvested 150 acres with standing crop

Enter 400 acres of flax (and the actual amount you harvested from those acres). Then enter 150 acres as standing using code 6826, “Harvest discount allowance.”

Multiple crops In provinces such as British Columbia, you may be able to harvest your commodity early enough to plant another commodity on those same acres. If you harvest both commodities in your 2019 fiscal period; report each commodity’s acreage and production in your crop inventory.

Example You planted two acres of strawberries and harvested the berries early in the summer. You then removed the strawberry plants and planted potatoes, which you harvested in the fall.

Enter:

■ 2 acres of strawberries and the amount you harvested from those acres

■ 2 acres of potatoes and the amount you harvested from those acres

Multi-stage crops Multi-stage crops are commodities that take longer than one year to reach full production. Because multi-stage crops are grown over several years, there are different inventory codes to reflect the stage of production.

Use the “Inventory code list” on page 109 to report the stage of production for your commodity.

Report all the acres of your crop even if you did not harvest the crop in your 2019 program year.

The multi-stage crops include:

■ highbush blueberries

■ grapes

■ sod

■ Christmas trees

■ echinacea

■ ginseng

In British Columbia, multi-stage crops also include:

■ cranberries

■ hops

■ sweet cherries

■ apples

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In New Brunswick and Nova Scotia, multi-stage crops also include:

■ lowbush blueberries

■ cranberries

Highbush blueberries and grapes Start reporting your acres in the year you plant. Continue reporting your acres during the non-bearing years.

Lowbush blueberries Start reporting your acres once you have cleared the land and started nurturing the plants. Once you start producing blueberries, report your acres based on their stage of growth.

Sod Report your total sod acres (seeded, growing, and harvested) based on their stage of growth at the end of your fiscal period.

Example 1 You seeded 150 acres at the end of 2019 and harvested them in 2020. Enter 150 acres using code 6941, “Sod, acres seeded.”

Example 2 You seeded 150 acres in 2018 but did not harvest these acres until 2020. Enter 150 acres using code 6943, “Sod, acres growing.”

If you harvested and then re-seeded the same sod acres in your 2019 fiscal period, report the acres twice.

Example If you harvested and then reseeded 150 acres, enter 150 acres using code 6945, “Sod, acres harvested,” and 150 acres using code 6941, “Sod, acres seeded.”

If you produce sod in the following regions of British Columbia:

■ use code 6937, “Sod, acres harvested (BC Coastal Regions),” to enter your sod

■ enter your acres once, even if you had more than one harvest within your fiscal period

Alberni-Clayoquot (23) Greater Vancouver (15)

Capital (17) Nanaimo (21)

Comox-Strathcona (25) Powell River (27)

Cowichan Valley (19) Squamish-Lillooet (31)

Fraser Valley (9) Sunshine Coast (29)

Christmas trees There are two types of Christmas tree operations:

■ tree farms

■ managed natural tree stands

Tree farms plant their seedlings in a greenhouse, garden or tree farm, and maintain them until harvested.

Report your total acres of trees based on their stage of growth at the end of your fiscal period. Report your production and ending inventories based on the number of trees you had in each of the stages of growth.

To report your trees, use:

■ nursery codes for the seedlings you grow in your greenhouse or garden prior to transplanting to your tree farm

■ code 6960 for the seedlings or trees you planted on your tree farm the first year (establishment stage)

■ codes 6961, 6962, 6963, and 6964 to report your seedlings or trees based on their stage of growth

Managed natural tree stand operations select their trees from existing forest and actively maintain them until harvested.

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Report the acres of trees that you actively maintained as either pre-harvested (in the ground) or harvested (removed from the ground). Base the number of acres you report on 1,000 trees per acre.

Example If you had 9,500 pre-harvested trees at the end of your fiscal period, enter 9.5 acres (9,500 ÷ 1,000 = 9.5).

For pre-harvested acres, enter the quantity produced based on the number of trees. Enter ending inventories and an end of year price for your pre-harvested trees.

For harvested acres, enter quantity produced based on the number of trees harvested.

Do not enter ending inventories or an end of year price for your harvested trees. Harvested trees are a perishable commodity. They are adjusted on an accounts receivable basis, not an inventory basis.

Echinacea and ginseng Enter acres in the establishment stage until the year of harvest. When you harvest the acres, enter them as root harvested.

Cranberries Enter acres in the establishment stage until production starts. This stage can last up to three years.

Hops Start entering your acres in the year you plant.

Sweet cherries and apples Enter the total acres planted for each commodity. Your Administration will collect details on the variety, age, and density of apples and sweet cherries.

Livestock inventory valuation Fill in this section if you had livestock in your inventory during the program year. Include livestock carried over from a previous fiscal period, or carried into the next fiscal period.

This part of the form is used to:

■ measure your livestock inventory change from the ending amount you reported in 2018 to the ending amount in the 2019 program year

■ show that your farm has completed a production cycle

How to fill in the columns Code and description Use the “Inventory code list” on page 109 to report all livestock you had on hand at the end of your 2019 fiscal period. Enter each class of livestock separately.

Ending inventory Enter the number of head that you had on hand at the end of your 2019 fiscal period. Use actual (not rounded) numbers.

End of year price Include an End of year price (EYP) to value livestock inventories that are shaded on the “Inventory code list” (for your province or territory). If you are reporting a livestock category that is marked with an “X” on the “Inventory code list,” leave the column blank.

Do not fill in this column if you file to the CRA on the accrual basis.

Livestock lease agreements If you are involved in a lease agreement, or if you own part of an animal, report only your share of the lease agreement. For example, if you co-own a bull with another producer, enter 1/2 a bull in your inventory.

Lessee: if you lease a breeding herd but take only a percentage of the calf crop, enter your share of the:

■ herd based on your share of the calf crop (use code 8134, “Breeding females, leased (not owned),” to enter the leased cows)

■ calves (use the code for their weight class)

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Example If you lease 100 cows but take only 60% of the calf crop, enter only 60 cows (60% of 100) under code 8134. Then enter 60 calves using the codes based on their weights.

Lessor: if you own cows but lease them out and take a percentage of the calf crop, enter:

■ 100% of your cows (use the codes found in the “Inventory code list”)

■ your share of the calf crop (use the code for their weight class)

Livestock productive capacity This information is used to adjust your reference margins if your operation experienced a change in structure.

Livestock lease agreements If you lease animals but do not take 100% of the revenue from the animal, report only your share of the agreement.

Example If you lease 100 cows but only keep 60% of the calf crop, enter 60 cows.

100 × 60% = 60

Productive animals Code 104 – Cattle Enter the number of cows that calved in your 2019 fiscal period.

Do not report calves that were born in your 2019 fiscal year using this code, even if they were either:

■ weaned

■ sold

■ held over to sell in a different fiscal period

Enter all your calves as inventory in the “Livestock inventory valuation” section, even if you hold them over to your next fiscal period.

If you hold your calves over to your next fiscal period, enter them as code 105, “Feeder cattle,” next year if they have an appreciable gain in that fiscal period.

Codes 123 and 145 – Hogs Enter the number of sows in the breeding herd within the 2019 fiscal period. Enter the sows based on the type of operation (farrowing or farrow to finish). Calculate the average number of breeding sows by dividing the births in your 2019 fiscal year by your average birthrate per sow.

Example 10,000 births ÷ 23 average birthrate per sow 435 average number of breeding sows

If your hog operation only produced for part of the year, ensure your average number of breeding sows is lower to reflect your reduced production.

Codes 105 and 106 – Number of feeder livestock – Cattle Enter the number of animals you fed that had an appreciable gain in 2019 (a 90 kg/200 lbs weight gain or a minimum of 60 days on feed). Group the animals fed based on either:

■ the sale weight, if sold in the program year

■ expected sale weight, if not sold in the program year

Do not include the following animals in this section:

■ breeding animals

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■ culls

■ animals that have not been weaned

■ animals born within the operation in the program year

Codes 124 and 125 – Number of feeder livestock – Hogs Enter the number of animals fed. Group the animals fed based on either:

■ the sale weight, if sold in the program year

■ expected sale weight, if not sold in the program year

Do not include the following animals in this section:

■ breeding animals

■ culls

■ animals that have not been weaned

■ animals born within your operation in the program year

■ animals previously reported in a farrow to finish operation

Example You purchased, fed, and sold 100 Isoweans to weanling weight (8 to 50 lbs) and fed another 100 feeder hogs (50 lbs to slaughter). Enter 100 Hogs, nursery (fed up to 50 lbs), and 100 Hogs, feeders (fed over 50 lbs).

Custom fed livestock Enter the number of animal feed days. Animal feed days are the number of animals × the number of days each animal was fed.

Example 100 animals fed × 90 days 9,000 animal feed days

Supply managed commodities Enter the amount of quota and contract held.

Ranch fur operators Enter the number of females that birthed.

Other (specify below) Use the “Productive capacity list” on page 136 to enter any commodities that do not fit into the above categories. If the commodity is not listed, leave the code blank.

Purchased inputs Fill in this section if it is relevant to your farm.

Do not fill in this section if you filed to the CRA on the accrual basis.

Enter inputs you purchased to produce your agricultural commodities that you did not use by the end of your fiscal period.

Some examples of purchased inputs are:

■ fuel

■ chemicals

■ purchased seed

■ feed

■ embryos

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■ semen

■ fall application such as seed, fertilizers, and chemicals

Do not report your purchased inputs as ending inventory in the “Crop inventory valuation and productive capacity” and “Livestock inventory valuation” sections. For example, if you purchased $5,000 of wheat seed for next year’s crop, enter the amount as a purchased input but do not include the seed in the crop inventory section.

How to fill in the columns Code and description Use the “Expense code list” on page 135 or the “Commodity list” on page 104 to identify each item you enter. If your item is not listed, leave the code blank.

End of year amount Enter the dollar amount that you had on hand at the end of your 2019 fiscal period. Include any applicable 2019 fall applications and any prepaid purchases in 2019 that are designated for the 2020 fiscal period.

Example Based on a December 31 fiscal year-end:

In October 2019, you purchased $45,000 worth of fertilizer. You used half of it in your 2019 fiscal year and carried the other half over to the 2020 fiscal year as inventory. Enter a total of $45,000 in the “End of year amount” column.

Livestock owners and custom feedlot operators with prepared feed purchases Use code 571 to enter the value of prepared feed and protein supplements you have on hand at the end of your fiscal period.

Ranch fur operators with prepared feed expenses Use code 574 to enter the value of prepared feed and protein supplements you have on hand at the end of your fiscal period.

Deferred income and receivables Fill in this section if it is relevant to your farm.

Do not fill in this section if you file to the CRA on the accrual basis.

Deferred income is income you have chosen to postpone receipt of to the following fiscal period.

A receivable is income that is owed to you for goods delivered or services provided in this fiscal period but is not paid to you until your next fiscal period.

Deferred income or receivables must be for income that is allowable for AgriStability. For example, a receivable for the sale of grain is allowable; a receivable for machinery rental is non-allowable. For more information on allowable and non-allowable items, see your program handbook or visit the program website.

Enter your AgriInsurance (production/crop/hail insurance) indemnity as a receivable, even if you did not receive your full indemnity before your 2019 fiscal year-end.

How to fill in the columns Code and description Use the “Commodity list” on page 104 and the Program payment lists on pages 107 and 108 to enter all deferred income and receivables you had at the end of your fiscal period. If your item is not listed, leave the code blank.

Use code 9574, “Resales, rebates, GST/HST for allowable expenses,” to enter all deferred income or receivables for resale, rebate or GST/HST related to your allowable expenses.

Ending receivables and income deferred to 2020 Enter the dollar value of the account receivable or deferred income item owed to you at the end of your 2019 fiscal period.

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Commodity pools If you sold commodities into a pool but did not receive the full value for the sale of your commodity at your fiscal year-end, use code 4020, “Expected grains and oilseeds pool payments,” to enter any adjustments or final payments you received or expect to receive after your 2019 fiscal period. Provide an estimate if you do not know the amount of the adjustment or final payment.

If you deferred your pool payments (adjustments, interim, or final) to your next fiscal period, enter these deferrals using the code for the commodity.

Custom feedlot operator income Use code 246 to enter any amounts owed to you for custom feeding livestock.

Prescribed drought region (PDR), Prescribed flood region (PFR) and Canadian Food Inspection Agency (CFIA) deferrals If you deferred a PDR/PFR or CFIA payment out of your current fiscal period, enter the amount using the codes from the “PDR/PFR/CFIA deferred livestock codes” chart on page 31 of this guide.

Perishable horticulture crops Enter the sales of the 2019 crop that occurred in the 2020 program year as an ending receivable, once your entire 2019 crop has been marketed and sold.

Use code 4999, “Perishables-unreported deferral,” to enter your sales and leave the ending receivable blank, if you have not either:

■ marketed your entire 2019 crop

■ received all of your income from your 2019 fiscal period

When you know the ending receivable value, send the information to your Administration. We cannot process your form until you provide this amount.

Accounts payable Fill in this section if it is relevant to your farm.

Do not fill in this section if you filed to the CRA on the accrual basis.

An account payable is an expense that you owe for goods and services that you have received, but have not paid for in this fiscal period.

An account payable must be for an expense that is allowable for AgriStability. For example, a payable for a livestock purchase is allowable; a payable for building a barn is non-allowable.

Include in your payables any:

■ inputs that you did not pay for yet but were on hand in your inventory at the end of your 2019 fiscal period (you must also enter them in the “Purchased inputs” section)

■ feed or livestock that you did not pay for yet but had on hand in your inventory at the end of your 2019 fiscal period (you must also enter them in the “Crop inventory valuation and productive capacity” and “Livestock inventory valuation” sections)

Do not include in your payables either:

■ the interest part of an account payable

■ amounts you owed for items purchased through loans, lines of credit, or credit cards that have already been reported as an expense to CRA for tax purposes

How to fill in the columns Code and description Use the “Expense code list” on page 135 and the “Commodity list” on page 104 to enter the accounts payable you had at the end of your fiscal period. If your item is not listed, leave the code blank.

End of year amount Enter the dollar amount that you owed for the payable item at the end of your 2019 fiscal period.

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Livestock owners and custom feedlot operators with prepared feed purchases Use code 571 to enter purchases of prepared feed and protein supplements that were not paid for by the end of your fiscal period.

Livestock owners with custom feeding expenses Use code 573 to enter custom feeding expenses that were not paid for by the end of your fiscal period.

Ranch fur operators with prepared feed expenses Use code 574 to enter purchases of prepared feed and protein supplements that were not paid for by the end of your fiscal period.

Chapter 5 – Capital cost allowance (CCA)

What is capital cost allowance? You might acquire a depreciable property, such as a building, machinery, or equipment, to use in your farming business.

You cannot deduct the cost of the property when you calculate your net farming income for the year.

However, since these properties may wear out or become obsolete over time, you can deduct their cost over a period of several years. The deduction is called capital cost allowance (CCA).

You can usually claim CCA on a property when it becomes available for use.

To calculate your CCA claim, you will need to know the meaning of the following terms.

Accelerated investment incentive property (AIIP) – Property that is eligible for an enhanced first-year allowance that is subject to the CCA rules. The property may be eligible if it is acquired after November 20, 2018, and becomes available for use before 2028. For more information on AIIP, go to canada.ca/taxes-accelerated-investment-income.

Arm’s length – refers to a relationship or a transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

“Related persons” are not considered to deal with each other at arm’s length. Related persons include individuals connected by blood relationship, marriage, common-law partnership or adoption (legal or in fact). A corporation and another person or two corporations may also be related persons.

“Unrelated persons” may not be dealing with each other at arm’s length at a particular time. Each case will depend upon its own facts. The following criteria will be considered to determine whether parties to a transaction are not dealing at arm’s length:

■ whether there is a common mind which directs the bargaining for the parties to a transaction

■ whether the parties to a transaction act in concert without separate interests; “acting in concert” means, for example, that parties act with considerable interdependence on a transaction of common interest

■ whether there is de facto control of one party by the other because of, for example, advantage, authority or influence

For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

Available for use – Property other than a building usually becomes available for use on the earlier of:

■ the date you first use it to earn income

■ the second tax year after the year you acquire the property

■ the time just before you dispose of the property

■ the time the property is delivered or made available to you and is capable of producing a saleable product or service

■ the time the property is delivered and is capable of performing the function for which it was acquired only in respect of property acquired by you in the course of carrying on your farming or fishing business

Example If you buy a tractor and the seller delivers it to you in 2019, but it was not in working order until 2020, you cannot claim CCA on it until 2020. However, if you buy a tractor and the seller delivers it to you in working order in 2019, but you did not use it until 2020; you can still claim CCA in 2019 because it was available for use.

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A building or part of a building usually becomes available for use on the earlier of the following dates:

■ the date you start using 90% or more of the building in your business

■ the second tax year after the year you acquire the building

■ the time just before you dispose of the building

A building or part of a building you are constructing, renovating, or altering usually becomes available for use on the earlier of the following dates:

■ the date you complete the construction, renovation, or alteration

■ the date you start using 90% or more of the building in your business

■ the second tax year after the year you acquire the building

■ the time just before you dispose of the building

Capital cost – the amount on which you first claim CCA. The capital cost of a property is usually the total of the following:

■ the purchase price not including the cost of land, which is not depreciable (see “Land” on page 75)

■ the part of your legal, accounting, engineering, installation, and other fees that relate to buying or constructing the property (not including the part that applies to land)

■ the cost of any additions or improvements you made to the property after you acquired it, if you did not claim these costs as a current expense (such as modifications to accommodate persons with disabilities)

■ for a building, soft costs (such as interest, legal and accounting fees, and property taxes) related to the period you are constructing, renovating, or altering the building, if these expenses have not been deducted as current expenses

Depreciable property – the property on which you can claim CCA. It is usually capital property from a business or property. The capital cost can be written off as CCA over a number of years. You usually group depreciable properties into classes. Diggers, drills, and tools that cost $500 or more belong in Class 8. You have to base your CCA claim on the rate assigned to each class of property.

For the most common classes of depreciable properties you could use in your farming operation, see “Classes of depreciable property” on page 79, and the “Capital cost allowance (CCA) rates” chart on page 138.

Fair market value (FMV) – generally, the highest dollar value that you can get for your property in an open and unrestricted market between an informed and willing buyer and an informed and willing seller who are dealing at arm’s length with each other.

Non-arm’s length – generally refers to a relationship or transaction between persons who are related to each other.

However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships or corporations, depending on the circumstances. For more information, see the definition of “Arm’s length.”

Proceeds of disposition – the amounts you receive, or that we consider you to have received, when you dispose of your property (usually the selling price of the property). Proceeds of disposition is also defined to include, amongst other things, compensation you received for depreciable property that has been destroyed, expropriated, damaged, or stolen.

Undepreciated capital cost (UCC) – generally, the amount left after you deduct CCA from the capital cost of a depreciable property. Each year, the CCA you claim reduces the UCC of the property.

Zero-emission passenger vehicle (ZEPV) – means an automobile that is owned by the taxpayer and is included in Class 54 (but would otherwise be included in Class 10 or 10.1). The rules that apply to the definition of passenger vehicles apply to zero-emission passenger vehicles (ZEPVs). A ZEPV does not include a leased passenger vehicle, but other vehicles that would otherwise qualify as a ZEPV if owned by the taxpayer are subject to the same leasing deduction restrictions as passenger vehicles.

Zero-emission vehicle (ZEV) – is a motor vehicle that is owned by the taxpayer and where all of the following conditions are met:

■ is a plug-in hybrid with a battery capacity of at least 7kWh or is either fully:

– electric

– powered by hydrogen

■ is acquired, and becomes available for use, after March 18, 2019, and before 2028

■ has not been used for any purpose before it was acquired by the taxpayer

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■ is a vehicle for which:

– an election has not been made to forgo the Class 54 or 55 treatment

– assistance has not been provided by the Government of Canada under the new incentive announced on March 19, 2019

– an amount has not been deducted as CCA and a terminal loss has not been claimed by another person or partnership

How much CCA you can claim The CCA you can claim depends on the type of property you own and the date you acquired it. Group the depreciable property you own into classes. A specific rate of CCA generally applies to each class.

We explain the most common classes of property in “Classes of depreciable property” on page 79. We list most of the classes and their rates in the “Capital cost allowance (CCA) rates” chart on page 138.

Base your CCA claim on your fiscal period ending in 2019, and not the calendar year.

Basic information about CCA To decide whether an amount is a current expense or a capital expense, see the “Current or capital expenses” chart on page 36.

For the most part, use the declining balance method to calculate your CCA, as it is the most common one. This means that you apply the CCA rate to the capital cost (see the definition on page 72). Over the life of the property, the rate is applied against the remaining balance. The remaining balance declines each year that you claim CCA.

Example Last year, Abeer bought a building for $60,000 to use in her business. On her income tax return for last year, she claimed CCA of $1,200 on the building. This year, Abeer bases her CCA claim on her balance of $58,800 ($60,000 – $1,200).

You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you like, from zero to the maximum allowed for the year. If you do not have to pay income tax for the year, you may not want to claim CCA. Claiming CCA reduces the balance of the class by the amount of CCA claimed. As a result, the amount of CCA available for you to claim in future years will be reduced.

In the year you acquire a depreciable property, you can usually claim CCA only on one-half of your net additions to a class. We explain this half-year rule in “Column 9 – Adjustment for current year additions subject to the half-year rule” on page 78. The available-for-use rules may also affect the amount of CCA you can claim. For more information, see “Available for use” on page 71.

You cannot claim CCA on most land or on living things such as trees, shrubs, or animals. However, you can claim CCA on timber limits, cutting rights, and wood assets. For more information, see Interpretation Bulletin IT-481, Timber Resource Property and Timber Limits, and IT-501, Capital Cost Allowance – Logging Assets, and its Special Release.

If you receive income from a quarry, sand, or gravel pit, or a woodlot, you can claim a type of allowance known as a depletion allowance. For more information, see Income Tax Folio S4-F11-C1, Meaning of Farming and Farming Business, and Interpretation Bulletin IT-492, Capital cost allowance – Industrial mineral mines.

If you claim CCA and you later dispose of the property, you may have to add an amount to your income as a recapture of CCA. Alternatively, you may be able to deduct an additional amount from your income as a terminal loss. For more information, see “Column 6 – Undepreciated capital cost (UCC) after additions and dispositions” on page 76.

If you used depreciable property in 2019 that you used in your farming business before January 1, 1972, fill in “Area A – Part XVII properties” on form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses.

If you are a partner in a partnership, you cannot separately claim CCA for depreciable property owned by the partnership. Instead, the partnership can deduct CCA when calculating its net income or loss for the year. The partnership’s net income or loss is then allocated to the partners and the partner’s share is shown on the partner’s T5013 slip, Statement of Partnership Income. If the partnership does not need to file a partnership information return, you will not get a T5013.

You were asking? Q. How do I calculate my CCA claim if I start a business and my first fiscal period is from June 1, 2019,

to December 31, 2019?

A. Since your fiscal period is less than 365 days, you must prorate your CCA claim. Calculate your CCA using the rules we discuss in this chapter. However, base your CCA claim on the number of days in your fiscal period compared to 365 days.

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In this case, your fiscal period is 214 days. Suppose you calculate your CCA to be $3,500. The amount of CCA you can claim is $2,052 ($3,500 × 214 ÷ 365).

Form T1175, Farming – Calculation of Capital Cost Allowance (CCA) and Business-use-of-home Expenses Business-use-of-home expenses Use this section on form T1175 to list your expenses and any amount of CCA for the business use of your home. Include these expenses and any amount of CCA for business-use-of-home expenses on “Line 9896 – Other (specify)” in the “Expenses” section of form T1273 or form T1274. You can also report any business-use-of-home expense carryforward from a previous year on the chart. This chart is for information purposes and to help you make an adjustment at line 9934 if you have a loss in the year. For more information on this adjustment, see page 58.

Area A – Calculation of CCA claim The Government of Canada’s 2018 Fall Economic Statement was tabled on November 21, 2018. As a result, columns 4, 7, and 8 have been added to Area A. For more information on how this could affect your CCA calculations, go to canada.ca /taxes-accelerated-investment-income.

Use Area A on form T1175 to calculate your CCA deduction. Add lines (i) and (ii) of the chart and enter the result on line 9936 in the “Expenses” section of form T1273 or form T1274. If any part of the CCA is for business-use-of-home expenses, enter that part in the “Business-use-of-home expenses” section. For more information, see above.

Column 1 – Class number Enter in this column the class numbers of your properties. If this is the first year you are claiming CCA, see “Column 3 – Cost of additions in the year” below before completing column 1. If you claimed CCA last year, you can get the class numbers of your properties from last year’s form.

We discuss the more common types of depreciable properties in “Classes of depreciable property” on page 79, and we list most of the classes and their rates in the “Capital cost allowance (CCA) rates” chart on page 138.

Column 2 – Undepreciated capital cost (UCC) at the start of the year If this is the first year you are claiming CCA, skip this column. Otherwise, enter in this column the UCC for each class at the end of last year. Enter these amounts from column 13 from your 2018 form.

From your UCC at the start of 2019, subtract any investment tax credit (ITC) you claimed or were refunded in 2018. Also, subtract any 2018 ITC you carried back to a year before 2018.

In 2018, you may have received a GST/HST input tax credit for a passenger vehicle you used less than 90% of the time for your business. In this case, subtract the amount of the credit you got from your 2019 opening UCC. For more information, see “Grants, subsidies, and rebates” on page 85.

Note In 2019, you may be claiming, carrying back, or getting a refund of an ITC. If you still have depreciable property in the class, you have to adjust, in 2020, the UCC of the class to which the property belongs. To do this, subtract the amount of the credit from the UCC at the start of 2020. When there is no property left in the class, report the amount of the ITC as other income, on line 9600, in 2020.

Column 3 – Cost of additions in the year If you acquire or make improvements to depreciable property in the year, we consider them to be additions to the class in which the property belongs. You should:

■ fill in Areas B and C on your form, if applicable, as explained on page 75

■ for each class, enter in column 3 of Area A’s calculation table the amounts from column 5 for each class in Areas B and C

If a chart asks for the personal part of a property, this refers to the part you use personally, separate from the part you use for business. For example, if you use 25% of the building you live in for your farming business, your personal part is the remaining 75%.

Do not include the value of your labour in the cost of a property you build or improve. Include the cost of surveying or valuing a property you acquire. Remember that a property usually has to be available for use (see the definition on page 71) before you can claim CCA.

If you received insurance proceeds to reimburse you for the loss or destruction of depreciable property, enter the amount you spent to replace the property in column 3 of Area A, as well as in Area B or C, whichever applies.

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Include the amount of insurance proceeds considered as proceeds of disposition in column 5 of Area A, as well as in column 4 of Area D or E, whichever applies.

Note For more information, see “Insurance proceeds” on page 34.

If you replaced lost or destroyed property, special rules for replacement property may apply. The replacement property must be acquired within two years of the end of the tax year in which it was lost or destroyed. For more information, see Income Tax Folio S3-F3-C1, Replacement Property.

To find out if any of these special situations apply, see “Special situations” on page 84.

Area B – Equipment additions in the year List the details of all equipment (including motor vehicles) you acquired or improved in 2019. Group the equipment into the applicable classes, and put each class on a separate line.

Equipment you acquire to use in your business to earn income can include:

■ cement mixer, snow blower and lawn mower, machinery, motor vehicles

■ material for fishing

Enter on line 9925 the total business part of the cost of the equipment.

Area C – Building additions in the year List the details of all buildings you acquired or improved in 2019. Group the buildings into the applicable classes and put each class on a separate line.

Enter on line 9927 the total business part of the cost of the buildings. The cost includes the purchase price of the building, and any related expenses you should add to the capital cost of the building, such as legal fees, land transfer taxes, and mortgage fees.

Land Generally, land is not a depreciable property. Therefore, you cannot claim CCA on its cost. If you acquire a farm property that includes both land and a building, enter in column 3 of Area C only the cost that relates to the building. To calculate the building’s capital cost, you have to split any fees that relate to buying the property between the land and the building. Related fees may include legal and accounting fees.

Calculate the part of the related fees you can include in the capital cost of the building as follows:

building value total purchase price

× legal, accounting, or other fees

= the part of the fees you can include in the building’s cost

You do not have to split a fee if it relates only to the land, or only to the building. In this case, you would add the amount of the fee to the cost to which it relates; either the land or the building.

Area F – Land additions and dispositions in the year Enter on line 9923 the total cost of acquiring land in 2019. The cost includes the purchase price of the land plus any related expenses you should add to the capital cost of the land, such as legal fees, land transfer taxes, and mortgage fees.

You cannot claim CCA on land. Do not enter this amount in column 3 of Area A.

Area G – Quota additions and dispositions in the year Enter on line 9929 the total cost of acquiring quotas in 2019.

Column 4 – Cost of additions from column 3 which are eligible accelerated investment incentive properties (AIIPs) or zero-emission vehicles (ZEVs) Enter in column 4 the cost of additions from column 3 that are eligible accelerated investment incentive property (AIIP) or zero-emission vehicles (ZEVs) from Class 54 or 55 (see the definitions on pages 71 and 72). These properties must have become available for use in the year and be eligible for the enhanced allowance or accelerated investment incentive. AIIPs must be acquired after November 20, 2018, and ZEVs must be acquired after March 18, 2019. This number is a part of the total cost of additions in column 3 and cannot be higher than the number in column 3.

If no AIIPs and no ZEVs were acquired, enter “0” in this column.

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Column 5 – Proceeds of dispositions in the year Enter the details of your 2019 dispositions on your form, as explained below.

If you disposed of depreciable property in the current tax year, you should:

■ complete, for each class, Areas D and E, if applicable

■ enter in column 5 of the calculation table in Area A the amounts for each class from column 5 of Areas D and E

When completing the tables in Areas D and E, enter in column 3 of the table the lesser of:

■ your proceeds of disposition minus any related expenses

■ the capital cost of the property

Note If a chart asks for the personal part of a property, this refers to the part you use personally, separate from the part you use for business. For example, if you use 25% of the building you live in for business, your personal part is the other 75%.

Enter in column 5 of Area A for each class the amount from column 5 of Area D and Area E for the class.

If you received insurance proceeds to reimburse you for the loss or destruction of depreciable property, enter the amount you paid to replace the property in column 5 of Area A, as well as in column 4 of Area B or C, whichever area applies.

Include the amount of insurance proceeds considered as proceeds of disposition in column 5 of Area A, as well as in column 4 of Area D or E, whichever applies. This could include compensation you receive for property that someone destroys, expropriates, steals, or damages.

Note For more information, see “Insurance proceeds” on page 34.

If you dispose of a property for proceeds that are more than it cost you to acquire it (or you receive insurance proceeds for a property that was lost or destroyed that exceed the cost of the property), you will have a capital gain and possibly a recapture of CCA. You may be able to postpone or defer recognition of a capital gain or recapture of CCA in computing income if, among other things, the property disposed of is replaced within certain specified time limits. For more information, see “Replacement property” on page 89 and Income Tax Folio S3-F3-C1, Replacement Property.

Special rules may apply if you dispose of a building for less than both its UCC and your capital cost. If this is the case, see “Special rules for disposing of a building in the year” on page 87. If you dispose of a depreciable property for more than its cost, you will have a capital gain. For more information on capital gains, see Chapter 8. You cannot have a capital loss when you sell depreciable property. However, you may have a terminal loss. For an explanation of terminal losses, see “Column 6 – Undepreciated capital cost (UCC) after additions and dispositions” below.

For more information on proceeds of disposition, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Area D – Equipment dispositions in the year List the details of all equipment (including motor vehicles) you disposed of in your 2019 fiscal period. Group the equipment into the applicable classes and put each class on a separate line. Enter on line 9926 the total business part of the proceeds of disposition of the equipment.

Area E – Building dispositions in the year List all buildings and leasehold interests you disposed of in the current tax year. Group the buildings and leasehold interests into the applicable classes, and put each class on a separate line. Enter at line 9928 the total amount for the rental portion from the proceeds of disposition of the buildings and leasehold interests.

Area F – Land additions and dispositions in the year Enter on line 9924 the total of all amounts you received or will receive for disposing of land in the fiscal period.

Area G – Quota additions and dispositions in the year Enter on line 9930 the total of all amounts you received or will receive for disposing of quotas in the fiscal period.

Column 6 – Undepreciated capital cost (UCC) after additions and dispositions The undepreciated capital cost (UCC) amount for column 6 is the initial UCC amount at the start of the year in column 2 plus the cost of additions in column 3 minus the proceeds of dispositions in column 5.

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You cannot claim CCA when the amount in column 6 is:

■ negative (see “Recapture of CCA” below)

■ positive and you do not have any property left in that class at the end of your 2019 fiscal period (see “Terminal loss” below)

In either case, enter “0” in column 13.

Recapture of CCA If the amount in column 6 is negative, you have a recapture of CCA. Enter your recapture on line 9600 in the “Income” section of form T1273 or T1274.

A recapture of CCA can happen if the proceeds from the sale of depreciable property are more than the total of the following amounts:

■ the UCC of the class at the start of the period

■ the capital cost of any new additions during the period

A recapture of CCA can also occur, for example, when you get a government grant or claim an investment tax credit.

In some cases, you may be able to postpone a recapture of CCA. For example, you may sell a property and replace it with a similar one, someone may expropriate your property, or you may transfer property to a corporation, a partnership, or your child.

Terminal loss If the amount in column 6 is positive and you no longer own any property in that class, you may have a terminal loss. More precisely, you may have a terminal loss when, at the end of a fiscal period, you have no more property in the class but still have an amount you have not deducted as CCA. You can usually subtract this terminal loss from your gross farming income in the year you disposed of the depreciable property. Enter your terminal loss on line 9896 in the “Expenses” section of form T1273 or T1274.

For more information on recapture of CCA and terminal loss, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Note The rules for recapture of CCA and terminal loss do not apply to passenger vehicles in Class 10.1. To calculate your CCA claim, see the comments in “Column 10 – Base amount for CCA” on page 78.

Column 7 – Proceeds of dispositions available to reduce additions of AIIP and ZEV This column calculates the adjustments under certain circumstances to the additions for the year where there is also a disposition in the year.

When an AIIP and a non-AIIP of the same class are purchased during the year and a disposition occurs, the disposition first reduces the UCC of the non-AIIP before reducing the UCC of the AIIP.

To determine which part of your proceeds of dispositions, if any, will reduce the cost of your AIIP or ZEV additions, take the proceeds of disposition in column 5 minus the cost of additions in the year in column 3 plus the cost of additions for AIIP or ZEVs in column 4. If the result is negative enter “0.”

If no AIIPs and no ZEVs were acquired, you do not need to use this column.

Column 8 – Undepreciated capital cost (UCC) for current-year additions of AIIP and ZEV This column calculates the enhanced UCC amount used to determine the additional CCA for AIIP or ZEVs.

For this column, reduce the cost of AIIP or ZEV additions in column 4 by the proceeds of disposition available to reduce the AIIP or ZEV additions as calculated in column 7. Multiply the result by the following factor:

■ 1 for Classes 43.2 and 53

■ 1 1/2 for Class 55

■ 2 1/3 for Classes 43.1 and 54

■ 0 for property in Classes 12, 13, 14, and 15, as well as properties that are Canadian vessels included in paragraph 1100(1)(v) of the Income Tax Act Regulations

■ 1/2 for the remaining AIIPs

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These factors will change for properties that become available for use after 2023 and the incentive is completely phased out for properties that become available for use after 2027.

If no AIIPs and no ZEVs were acquired, enter “0” in this column.

Column 9 – Adjustment for current year additions subject to the half-year rule Generally, in the year you acquire or make additions to a property, you can usually claim CCA on half of your net additions. We call this the half-year rule. You calculate your CCA only on the net adjusted amount. For example, if before November 20, 2018, you acquired a property for $30,000, you would base your CCA claim on $15,000 ($30,000 × 50%) in the year you acquired the property. However, the half-year rule does not apply to AIIP or to ZEVs.

Calculate the net first-year additions that are subject to the half-year rule by taking the cost of total additions in column 3, minus AIIP and ZEV additions in column 4, minus proceeds of dispositions in column 5. Enter 50% of the result in column 9. If the result is negative, enter “0.”

There are circumstances where the half-year rule does not apply. For example, in a non-arm’s length transaction (see the definition on page 72) you may buy depreciable property that the seller continuously owned from the day that is at least 364 days before the end of your 2019 fiscal period to the day the property was acquired. However, if you transfer personal property, such as a car or a personal computer, into your business, the half-year rule applies to the particular property transferred.

Also, some properties are not subject to the half-year rule. Some examples are those in Classes 13, 14, 23, 24, 27, 34, and 52, as well as most of those in Class 12, such as small tools. The half-year rule does not apply when the available for use rules discussed on page 63 denies a CCA claim until the second tax year after you acquire the property.

For information on the special rules that apply to Class 13, see Interpretation Bulletin IT-464, Capital Cost Allowance – Leasehold Interests. For more information on the half-year rule, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Column 10 – Base amount for CCA The base amount for CCA is the undepreciated capital cost amount after additions, dispositions and the current year adjustments. This is the amount in column 6 plus the amount in column 8 minus the amount in column 9. The CCA rate is applied to this amount.

For a Class 10.1 vehicle you disposed of in your 2019 fiscal period, you may be able to claim 50% of the CCA that would be allowed if you still owned the vehicle at the end of your 2019 fiscal period. This is known as the half-year rule on sale.

You can use the half-year rule on sale if, at the end of your 2018 fiscal period, you owned the Class 10.1 vehicle you disposed of in 2019. If this applies to you, enter 50% of the amount from column 2 (for Class 10.1 vehicles) in column 10.

Column 11 – CCA rate (%) Enter the prescribed CCA rate (percentage) for each property class you have listed in Area A, column 1.

For information on certain kinds of property, see “Classes of depreciable property” on page 79. For a list of rates, see “Capital cost allowance (CCA) rates” on page 138.

Column 12 – CCA for the year In column 12, enter the CCA you want to deduct for 2019. You can claim the CCA for the year up to the maximum amount allowed. In Area A, you calculate the maximum amount for column 12 by multiplying the amount in column 10 by the amount in column 11.

In your first year of business, you may have to prorate your CCA claim. See “You were asking?” on page 73.

For Part XI assets, add the amounts in column 12 and enter the total on line (i). For Part XVII assets, add the amounts in column 6 and enter the total on line (ii). Enter the total of lines (i) and (ii), minus any CCA for business-use-of-home expenses, on line 9936 of the “Expenses” section of form T1273 or T1274. If you are a co-owner, enter only your share of the CCA. To find out how to calculate your CCA claim if you are using the property for both business and personal use, see “Personal use of property” on page 84. Enter any CCA for business-use-of-home expenses on page 1 of form T1175. For more information, see “Business-use-of-home expenses” on page 38.

Column 13 – UCC at the end of the year The final result in column 13 is the undepreciated capital cost (UCC) at the end of the year. This is the result of the UCC after additions and dispositions in column 6, minus the amount for capital cost allowance claimed for the year in column 12. The amount in column 13 is the starting UCC balance you will use when you calculate your CCA claim next year. Next year, enter this amount in column 2. If you have a terminal loss or a recapture of CCA, enter “0” in column 13.

The example at the end of this chapter sums up CCA.

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Classes of depreciable property In this part, we discuss the more common classes of depreciable farm property and the rates that apply to each class.

Class 1 (4%) A building may belong to Class 1, 3, or 6, depending on what the building is made of and the date you acquired it. You also include in these classes the parts that make up the building, such as:

■ electrical wiring

■ lighting fixtures

■ plumbing

■ sprinkler systems

■ heating equipment

■ air-conditioning equipment (other than window units)

■ elevators

■ escalators

Note Land is not depreciable property. Therefore, when you acquire property, only include the cost related to the building in Area A and Area C. Enter on line 9923 in Area F the cost of all land additions in 2019. For more information, see “Area F – Land additions and dispositions in the year” on page 75 and “Column 3 – Cost of additions in the year” on page 74.

For more information, see Interpretation Bulletin IT-79, Capital Cost Allowance – Buildings or Other Structures.

Class 1 includes most buildings acquired after 1987, unless they specifically belong in another class. Class 1 also includes the cost of certain additions or alterations you made to a Class 1 building or certain buildings of another class after 1987.

The CCA rate for eligible non-residential buildings acquired by a taxpayer after March 18, 2007, and used in Canada to manufacture or process goods for sale or lease, includes an additional allowance of 6% for a total rate of 10%. The CCA rate for other eligible non-residential buildings includes an additional allowance of 2% for a total rate of 6%.

To be eligible for one of the additional allowances, you must elect to put a building in a separate class. To make the election, attach a letter to your return for the tax year in which you acquired the building. If you do not file an election to put it in a separate class, the 4% rate will apply.

The additional allowance applies to buildings acquired after March 18, 2007, (including a new building, if any part of it is acquired after March 18, 2007, when the building was under construction on March 19, 2007) that have not been used or acquired for use before March 19, 2007.

To be eligible for the 6% additional allowance, at least 90% of a building (measured by square footage) must be used in Canada for the designated purpose at the end of the tax year. Manufacturing and processing buildings that do not meet the 90% use test will be eligible for the additional 2% allowance if at least 90% of the building is used in Canada for non-residential purposes at the end of the tax year.

Class 3 (5%) Most buildings acquired before 1988 are included in Class 3 or Class 6.

If you acquired a building before 1990 that does not fall into Class 6, you can include it in Class 3 with a CCA rate of 5% if one of the following applies:

■ you acquired the building under the terms of a written agreement entered into before June 18, 1987

■ the building was under construction by you, or for you, on June 18, 1987

Include in Class 3 the cost of any additions or alterations made after 1987 to a Class 3 building that does not exceed the lesser of the following two amounts:

■ $500,000

■ 25% of the building’s capital cost (including the cost of additions or alterations to the building included in Class 3, Class 6, or Class 20 before 1988)

Any amount that exceeds the lesser amount above is included in Class 1.

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Class 6 (10%) Include a building in Class 6 with a CCA rate of 10% if it is made of frame, log, stucco on frame, galvanized iron, or corrugated metal. In addition, one of the following conditions has to apply:

■ you acquired the building before 1979

■ the building is used to gain or produce income from farming

■ the building has no footings or other base supports below ground level

If any of the above conditions apply, you also add the full cost of all additions and alterations to the building to Class 6.

If none of the above conditions apply, include the building in Class 6 if one of the following conditions applies:

■ you entered into a written agreement before 1979 to acquire the building, and the footings or other base supports of the building were started before 1979

■ you started construction of the building before 1979 (or it was started under the terms of a written agreement you entered into before 1979), and the footings or other base supports of the building were started before 1979

Also include in Class 6 certain greenhouses and fences.

For additions or alterations to such a building:

■ add to Class 6 the first $100,000 of additions or alterations made after 1978

■ add to Class 3:

– the part of the cost of all additions or alterations over $100,000 made after 1978 and before 1988

– the part of the cost of additions or alterations over $100,000 made after 1987, but only up to $500,000 or 25% of the cost of the building, whichever is less

■ add to Class 1 any additions or alterations over these limits

For more information, see Interpretation Bulletin IT-79, Capital Cost Allowance – Buildings or Other Structures.

Class 8 (20%) Class 8 with a CCA rate of 20% includes certain property that is not included in another class. Examples are furniture, appliances, and tools costing $500 or more per tool, some fixtures, machinery, outdoor advertising signs, refrigeration equipment, and other equipment you use in the business.

Photocopiers and electronic communications equipment, such as fax machines and electronic telephone equipment, are also included in Class 8.

Note If this equipment costs $1,000 or more, you can elect to have it included in a separate class. The CCA rate will not change but a separate CCA deduction can now be calculated for a five-year period. When all the property in the class is disposed of, the UCC is fully deductible as a terminal loss. Any UCC balance remaining in the separate class at the end of the fifth year has to be transferred back to the general class in which it would otherwise belong. To make an election, attach a letter to your income tax return for the tax year in which you acquired the property. For more information on terminal losses, see “Column 6 – Undepreciated capital cost (UCC) after additions and dispositions” on page 76.

Include data network infrastructure equipment and systems software for that equipment acquired before March 23, 2004, in Class 8. If acquired after March 22, 2004, include it in Class 46. See “Class 46 (30%)” on page 82.

Include buildings you use to store fresh fruit or vegetables at a controlled temperature, by or for the persons by whom they were grown, in Class 8 instead of Class 1, Class 3, or Class 6. Also include in Class 8 any buildings you use to store silage.

Class 10 (30%) Class 10 with a CCA rate of 30% includes general purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment, if you acquired them either:

■ before March 23, 2004

■ after March 22, 2004, and before 2005, and you made an election

Class 10 also includes motor vehicles, as well as some passenger vehicles.

Include your passenger vehicle in Class 10 unless it meets a Class 10.1 condition. List each Class 10.1 vehicle separately.

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Eligible zero-emission vehicles (see definition on page 72) are now included in Class 54 at a rate of 30%.

Class 10.1 (30%) Your passenger vehicle (see the definition on page 48) may belong to either Class 10 or Class 10.1.

To determine the class to which your passenger vehicle belongs, use the cost of the vehicle before you add the GST and PST, or HST.

Include your passenger vehicle in Class 10.1 if you bought it in your 2019 fiscal period and it cost more than $30,000. List each Class 10.1 vehicle separately.

We consider the capital cost of that vehicle to be $30,000 plus the related GST and PST, or HST. The $30,000 amount is the capital cost limit for a passenger vehicle.

Note Use the GST rate of 5% and the appropriate PST rate for your province or territory. If your province is a participating province, use the appropriate HST rate. For more information on the GST and the HST, see guide RC4022, General Information for GST/HST Registrants.

Example Vivienne owns a farming business. On June 21, 2019, she bought two passenger vehicles to use in her farming business. The PST rate for her province is 8%. Vivienne kept the following records for 2019:

Vehicle 1 Vehicle 2

Cost $33,000 $28,000

GST $1,650 $1,400

PST $2,640 $2,240

Total $37,290 $31,640

Vivienne puts Vehicle 1 in Class 10.1, since she bought it in 2019 and it cost her more than $30,000. Before Vivienne enters an amount in column 3 of Area B, she has to calculate the GST and PST on $30,000. She does this as follows:

■ GST at 5% of $30,000 = $1,500

■ PST at 8% of $30,000 = $2,400

Therefore, Vivienne’s capital cost is $33,900 ($30,000 + $1,500 + $2,400). She enters this amount in column 3 of Area B.

Vivienne puts Vehicle 2 into Class 10, since she bought it in 2019, and it did not cost her more than $30,000. Vivienne’s capital cost is $31,640 ($28,000 + $1,400 + $2,240). She enters this amount in column 3 of Area B.

Eligible zero-emission vehicles (see definition on page 72) are now included in Class 54 at a rate of 30%.

Class 12 (100%) Class 12 includes property such as tools, medical or dental instruments, and kitchen utensils that cost less than $500 and were acquired on or after May 2, 2006.

Class 12 includes china, cutlery, linen, and uniforms. It also includes video cassettes, video laser discs, and digital video disks that you rent and do not expect to rent to any one person for more than 7 days in a 30-day period.

Most small tools in Class 12 are not subject to the half-year rule. They are fully deductible in the year of purchase. If the tool costs $500 or more, include it in Class 8 with a CCA rate of 20%.

Class 12 tools that are subject to the half-year rule include dies, jigs, patterns, moulds or lasts, and the cutting or shaping part of a machine. For more information, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

Include in Class 12 with a CCA rate of 100% computer software that is not systems software. Software in Class 12 is subject to the half-year rule.

Class 12 specifically excludes electronic communication devices and electronic data processing equipment.

Class 14 (5%) Class 14 includes patents, franchises, concessions, or licences for a limited period. Your CCA is whichever of the following amounts is less:

■ the total of the capital cost of each property spread out over the life of the property

■ the undepreciated capital cost to the taxpayer as of the end of the tax year of property of that class

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Class 14.1 (5%) Starting January 1, 2017, include in Class 14.1 property that:

■ is goodwill

■ was eligible capital property (ECP) immediately before January 1, 2017, and is owned at the beginning of that day

■ is acquired after 2016, other than:

– property that is tangible or corporeal property

– property that is not acquired for the purpose of gaining or producing income from business

– property in respect of which any amount is deductible (other than as a result of being included in Class 14.1) in computing the income from the business

– an interest in a trust

– an interest in a partnership

– a share, bond, debenture, mortgage, hypothecary claim, note, bill or other similar property

– property that is an interest in, or for civil law a right in, or a right to acquire, a property described in any of the above sub-bullets

Examples for farming are milk and egg quotas.

For tax years that end prior to 2027, properties included in Class 14.1 that were acquired before January 1, 2017, will be depreciable at a CCA rate of 7% instead of 5%. Transitional rules will apply.

Properties that are included in Class 14.1 and acquired after 2016 will be included in this class at a 100% inclusion rate with a 5% CCA rate on a declining-balance basis and the existing CCA rules will normally apply.

For more information about the new Class 14.1 and the transitional rules, see “Explanatory Notes – Eligible Capital Property” at budget.gc.ca/2016/docs/tm-mf/notes-en.html.

Note Property in this new Class 14.1 is excluded from the definition of capital property for GST/HST purposes.

Class 45 (45%) Include general-purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including associated data processing equipment, in Class 45 with a CCA rate of 45% if you acquired them after March 22, 2004, and before March 19, 2007.

Note If you acquired the equipment or software before 2005 and made the separate Class 8 election, as discussed in the Class 8 note, the property does not qualify for the 45% rate.

Class 46 (30%) Include in Class 46 with a CCA rate of 30% data network infrastructure equipment and systems software for that equipment if they were acquired after March 22, 2004. If they were acquired before March 23, 2004, include them in Class 8. See “Class 8 (20%)” on page 80.

Class 50 (55%) Include in Class 50 with a CCA rate of 55% property acquired after March 18, 2007, that is general purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment.

Do not include property that is included in Class 52 or that is mainly or is used mainly as:

a) electronic process control or monitor equipment

b) electronic communications control equipment

c) systems software for equipment referred to in a) or b)

d) data handling equipment (other than data handling equipment that is ancillary to general-purpose electronic data processing equipment)

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Class 52 (100%) Include in Class 52 with a CCA rate of 100% (with no half-year rule) general purpose electronic data processing equipment (commonly called computer hardware) and systems software for that equipment, including ancillary data processing equipment if acquired after January 27, 2009, and before February 1, 2011.

Do not include property that is mainly or is used mainly as:

a) electronic process control or monitor equipment

b) electronic communications control equipment

c) systems software for equipment referred to in a) or b)

d) data handling equipment (other than equipment that is ancillary to general-purpose electronic data processing equipment)

To qualify for this rate the asset must also meet the following conditions:

■ be located in Canada

■ have not been used, or acquired for use, for any purpose before it is acquired by the taxpayer

■ be acquired by the taxpayer either:

– for use in a business carried on by the taxpayer in Canada or to earn income from property located in Canada

– for lease by the taxpayer to a lessee for the lessee to use in a business the lessee carried on in Canada or to earn income from property located in Canada

Class 54 (30%) and Class 55 (40%) – Zero-emission vehicles For zero-emission vehicles (see definition on page 72) acquired after March 18, 2019, two new CCA classes are added. Class 54 was created for zero-emission vehicles that would otherwise be included in Class 10 or 10.1, with the same CCA rate of 30%. Class 55 was created for zero-emission vehicles otherwise included in Class 16 with the same CCA rate of 40%. The CCA still applies on a declining-balance basis.

An enhanced first-year CCA deduction with the following phase-out period is available:

■ 100% after March 18, 2019, and before 2024

■ 75% after 2023 and before 2026

■ 55% after 2025 and before 2028

The enhanced first-year allowance will be calculated by:

■ increasing the net capital cost addition to the new class for property that becomes available for use before 2028, and applying the prescribed CCA rate for the class as described below:

– For Class 54, applying the prescribed CCA rate of 30% to:

■ 2 1/3 times the net addition to the class for property that becomes available for use before 2024

■ 1 1/2 times the net addition to the class for property that becomes available for use in 2024 or 2025

■ 5/6 times the net addition to the class for property that becomes available for use after 2025 and before 2028

– For Class 55, applying the prescribed CCA rate of 40% to:

■ 1 1/2 times the net addition to the class for property that becomes available for use before 2024

■ 7/8 times the net addition to the class for property that becomes available for use in 2024 or 2025

■ 3/8 times the net addition to the class for property that becomes available for use after 2025 and before 2028

■ suspending the existing CCA half-year rule

The CCA will be applicable on any remaining balance in the new classes using the specific rate for the new class.

A taxpayer may elect to not include in Class 54 or 55 a vehicle that would otherwise be a zero-emission vehicle or a zero-emission passenger vehicle. When such an election is filed, the vehicle will no longer be considered to be a zero-emission vehicle or a zero-emission passenger vehicle. As a result, the vehicle will be included in its usual CCA Class 10, 10.1 or 16 as the case may be. Such vehicles will not qualify for the enhanced first-year CCA under the ZEV rules. However those vehicles, that will be included in Class 10, 10.1 or 16, may be eligible for enhanced CCA under the AIIP rules.

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The election must be filed with the Minister of National Revenue in your Income Tax and Benefit Return for the tax year in which the vehicle is acquired. There is no provision for late-filing or amended elections.

Class 54 (30%) Include in Class 54 zero-emission vehicles that are not included in Class 16 or 55 and would normally be included in Class 10 or 10.1.

There is a limit of $55,000 (plus federal and provincial sales taxes), for 2019, on the capital cost for each zero-emission vehicle in Class 54. The limit will be reviewed annually. Class 54 may include both zero-emission vehicles that do and do not exceed the prescribed threshold. However, unlike Class 10.1, Class 54 does not establish a separate class for each vehicle whose cost exceeds the threshold.

If a zero-emission vehicle is disposed of to a person or partnership with whom you deal at arm’s length, and its cost exceeds the prescribed amount, the proceeds of disposition will be adjusted based on a factor equal to the prescribed amount as a proportion of the actual cost of the vehicle. For dispositions made after July 29, 2019, based on proposed legislation, the actual cost of the vehicle will also be adjusted for the payment or repayment of Government assistance.

Example

First-year enhanced allowance Acquisition cost $60,000 First-year CCA $55,000 × 100% = $55,000 Undepreciated capital cost (UCC) $55,000 – $55,000 = 0 Proceeds of disposition $30,000 Part of proceeds of disposition to be deducted from the UCC $30,000 × ($55,000 ÷ $60,000) = $27,500

Class 55 (40%) Include in Class 55 zero-emission vehicles that would normally be included in Class 16.

Special situations Personal use of property If you buy property for business and personal use, you can show the business part of the property in Area B or C in one of two ways:

■ If your business use stays the same from year to year, enter the total cost of the property in column 3, the personal part in column 4, and the business part in column 5. To calculate the CCA you can claim, enter the amount from column 5 in column 3 of Area A.

■ If your business use changes from year to year, enter the total cost of the property in column 3 and column 5, and enter “0” in column 4.

Enter in column 3 of Area A the amount from column 5 of Area B or Area C and calculate the CCA amount (business and personal) in column 12. The amount in column 13 (UCC at the end of the year) of Area A is equal to the amount in column 6 minus the amount in column 12.

When you claim CCA, you will have to calculate the allowable part you can claim for business use.

Example Jennifer owns a business. She bought a car in 2019 that she uses for both personal and business use. The car cost $20,000, including all charges and taxes. Therefore, she includes the car in Class 10. Her business use this year was 12,000 kilometres of the total 18,000 kilometres driven. She calculates her CCA on the car for 2019 as follows:

She enters $20,000 in column 3 and column 5 of Area B. She also enters $20,000 in column 3 of Area A. By completing the other columns in the chart, she calculates a CCA claim of $3,000. Because Jennifer used her car partly for personal use, she calculates her CCA claim as follows:

12,000 (business kilometres) 18,000 (total kilometres)

× $3,000 = $2,000

Jennifer enters $2,000 on line 9936 in the “Expenses” section of form T1273 or T1274.

Note The capital cost limits on a Class 10.1 vehicle (a passenger vehicle) still apply when you split the capital cost between business and personal use. For more information, see “Class 10.1 (30%)” on page 81.

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Changing from personal to business use If you bought a property for personal use and started using it in your farming business in your current tax year, there is a change in use. You need to determine the capital cost for business purposes at the moment of this change in use.

If the fair market value (FMV) of a depreciable property (such as equipment or a building) is less than its original cost when you change its use, the amount you enter in column 3 of Area B or C is the FMV of the property (excluding the land value if the property is land and a building). If the FMV is more than the original cost of the property (excluding the land value if the property is land and a building) when you change its use, use the following chart to determine the amount to enter in column 3 of Area B or Area C.

Enter the FMV of the property in column 3 of Area B or C, whichever applies, if, at the time of change in use, the FMV of the depreciable property is less than its original cost.

When you start using your property for your farming business use, you are considered to have disposed of it. If the FMV of the property is more than its cost, you may have a capital gain unless you file an election. For more information on capital gains, see Chapter 8. Use the following chart to determine the amount to enter in column 3 when the FMV is more than its original cost.

Capital cost calculation – Change in use

Actual cost of the property $ 1

FMV of the property $ 2

Amount on line 1 $ 3

Line 2 minus line 3 (if negative, enter “0”) $ 4

Enter all capital gains deductions claimed for the amount on line 4* $ × 2 = $ 5

Line 4 minus line 5 (if negative, enter “0”) $ × 1/2 = $ 6

Capital cost (line 1 plus line 6) $ 7

Enter the capital cost of the property from line 7 in column 3 of Area B or C.

* Enter the amount that relates only to the depreciable property.

Note We consider that you acquire the land for an amount equal to its FMV when you change its use. Include this amount on “Line 9923 – Total cost of all land additions in the year” in Area F.

Grants, subsidies, and rebates You should subtract from the applicable expense any rebate, grant, or assistance you received. Enter the net expense on the appropriate line of your form.

When you get a grant, subsidy, or rebate from a government or a government agency to buy depreciable property, subtract the amount of the grant, subsidy, or rebate from the property’s capital cost. Do this before you enter the capital cost in column 3 of Area B or C.

If the rebate is more than the remaining undepreciated capital cost in the particular class, add the excess to income on line 9574 or 9575.

You may have paid GST or HST on some of the depreciable property you acquired for your business. If so, you may have also received an input tax credit from us. Subtract the input tax credit from the property’s capital cost. Do this before you enter the capital cost in column 3 of Area B or C, whichever applies. If you get an input tax credit for a passenger vehicle you use in your business, use one of these methods:

■ For a passenger vehicle you used 90% or more of the time for your business, subtract the amount of the credit from the vehicle’s cost before you enter its capital cost in column 3 of Area B.

■ For a passenger vehicle you used less than 90% of the time for your business, do not make an adjustment in 2019. Instead, subtract the amount of the credit from your beginning UCC in 2020.

Input tax credits are considered government assistance. Include the amount you claimed on line 108 of your GST/HST return on line 9574 or 9575 only if you cannot apply the rebate, grant, or assistance you received to reduce a particular expense or an asset’s capital cost.

You may get an incentive from a non-government agency to buy depreciable property. For example, you may receive a tax credit that you can use to reduce your income tax payable.

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For more information about government assistance, see Interpretation Bulletin IT-273, Government Assistance – General Comments.

Non-arm’s length transactions When you acquire depreciable property in a non-arm’s length transaction (see the definition on page 72), there are special rules for determining the property’s cost. These special rules do not apply if you acquire the property because of someone’s death.

You can acquire depreciable property in a non-arm’s length transaction from:

■ an individual resident in Canada

■ a partnership with at least one partner who is an individual resident in Canada

■ a partnership with at least one partner who is another partnership

If you pay more for the property than the seller paid for it, calculate the capital cost as follows:

Capital cost calculation Non-arm’s length transaction – Resident of Canada

The seller’s cost or capital cost $ 1

The seller’s proceeds of disposition $ 2

Amount from line 1 $ 3

Line 2 minus line 3 (if negative, enter “0”) $ 4

Enter any capital gains deduction claimed for the amount on line 4 $ × 2 = $ 5

Line 4 minus line 5 (if negative, enter “0”) $ × 1/2 = $ 6

Capital cost Line 1 plus line 6 $ 7

Enter this amount in column 3 of either Area B or C, whichever applies. Do not include the cost of the related land. Include the cost of the related land on “Line 9923 – Total cost of all land additions in the year” in Area F of your form.

We consider that you acquire the land for an amount equal to its FMV when you change its use. Include this amount on line 9923 in Area F.

You can also acquire depreciable property in a non-arm’s length transaction from:

■ a corporation

■ an individual who is not a resident of Canada

■ a partnership with no partners who are individuals resident in Canada or with no partners that are other partnerships

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If you pay more for the property than the seller paid for it, calculate the capital cost as follows:

Capital cost calculation Non-arm’s length transaction – Non-resident of Canada

The seller’s cost or capital cost $ 1

The seller’s proceeds of disposition $ 2

Amount from line 1 $ 3

Line 2 minus line 3 (if negative, enter “0”) $ × 1/2 = $ 4

Capital cost Line 1 plus line 4 $ 5

Enter this amount in column 3 of either Area B or C, whichever applies. Do not include the cost of the related land. Include the cost of the related land on “Line 9923 – Total cost of all land additions in the year” in Area F of your form.

If you acquire depreciable property in a non-arm’s length transaction and pay less for it than the seller paid, your capital cost is the same amount as the seller paid. The difference between what you paid and what the seller paid is considered to be deducted as CCA. Enter the amount you paid in column 3 of Area A. Enter the same amount in Area B or C, whichever applies.

Example Rachel bought a pickup truck for $4,000 from her father, Marcus, in her 2019 fiscal period. Marcus paid $10,000 for the truck in 2009. Since the amount Rachel paid is less than the amount Marcus paid, we consider Rachel’s cost to be $10,000. We also consider Rachel to have deducted CCA of $6,000 in the past ($10,000 – $4,000).

Rachel fills in the CCA chart as follows:

■ in Area B, she enters $10,000 in column 3, “Total cost”

■ in Area A, she enters $4,000 in column 3, “Cost of additions in the year,” as the addition for her 2019 fiscal period

There is a limit on the cost of a passenger vehicle you buy in a non-arm’s length transaction. The cost is the lesser of:

■ the FMV when you buy it

■ $30,000 plus any GST/HST or PST you would pay on $30,000 if you bought it in your 2019 fiscal period

■ the seller’s cost amount of the vehicle when you buy it

The cost amount can vary depending on what the seller used the vehicle for before you bought it. If the seller used the vehicle to earn income, the cost amount would be the UCC of the vehicle when you buy it. If the seller did not use the vehicle to earn income, the cost amount will usually be the original cost of the vehicle.

For more information on non-arm’s length transactions, see the Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

Special rules for disposing of a building in the year If you disposed of a building in the current tax year, special rules may apply, making the proceeds of disposition an amount other than the actual proceeds of disposition. This happens when you meet both of the following conditions:

■ you disposed of the building for an amount less than both its cost amount, as calculated below, and its capital cost to you

■ you, or a person with whom you do not deal at arm’s length (see the definition on page 71), owned the land that the building is on, or the land next to it, that was necessary for the building’s use

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To calculate the cost amount:

■ if the building was the only property in the class, the cost amount is the undepreciated capital cost (UCC) of the class before you disposed of the building

■ if more than one property is in the same class, you have to calculate the cost amount of each building as follows:

capital cost of the building capital cost of all the properties in the class that have

not been disposed of previously

× UCC of the class = cost amount of the building

Note If a building acquired in a non-arm’s length transaction was previously used for something other than producing income, the capital cost of the property will need to be recalculated to determine the cost amount of the building.

For more information on proceeds of disposition, see Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance.

If you disposed of a building under these conditions and you or a person with whom you do not deal at arm’s length disposed of the land in the same year, calculate your deemed proceeds of disposition as shown in Calculation A, on page 88.

If you, or a person with whom you do not deal at arm’s length, did not dispose of the land in the same year as the building, calculate your deemed proceeds of disposition as shown in Calculation B, on page 89.

Calculation A Land and building disposed of in the same year

FMV of the building when you disposed of it $ 1

FMV of the land just before you disposed of it $ 2

Line 1 plus line 2 $ 3

Seller’s adjusted cost base of the land $ 4

Total capital gains (without reserves) from any disposition of the land (such as a change in use) by you, or by a person not dealing at arm’s length with you, in the three-year period before you disposed of the building, to you or to another person not dealing at arm’s length with you $ 5

Line 4 minus line 5 (if negative, enter “0”) $ 6

Line 2 or line 6, whichever amount is less $ 7

Line 3 minus line 7 (if negative, enter “0”) $ 8

Cost amount of the building just before you disposed of it $ 9

Capital cost of the building just before you disposed of it $ 10

Line 9 or line 10, whichever amount is less $ 11

Line 1 or line 11, whichever amount is more $ 12

Deemed proceeds of disposition of the building

Line 8 or line 12, whichever amount is less (enter the amount from line 13 in column 3 of Area E, and include it in column 5 of Area A) $ 13

Deemed proceeds of disposition of the land

Proceeds of disposition of the land and the building $ 14

Amount from line 13 $ 15

Line 14 minus line 15 (include this amount on line 9924 of Area F) $ 16

If you have a terminal loss on the building, include it on line 9896 in the “Expenses” section of your form.

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Calculation B Land and building disposed of in different years

Cost amount of the building just before you disposed of it $ 1

FMV of the building just before you disposed of it $ 2

Line 1 or line 2, whichever amount is more $ 3

Actual proceeds of disposition, if any $ 4

Line 3 minus line 4 $ 5

Amount from line 5 $ × 1/2 = $ 6

Amount from line 4 $ 7

Deemed proceeds of disposition for the building

Line 6 plus line 7 (enter this amount in column 3 of Area E and include it in column 5 of Area A) $ 8

If you have a terminal loss on the building, include it on line 9896 in the “Expenses” section of your form.

Usually, you can deduct 100% of a terminal loss, but only 50% of a capital loss. Calculation B makes sure you use the same percentage to calculate both a terminal loss on a building and a capital loss on land. As a result of this calculation, you add 50% of the amount on line 5 to the actual proceeds of disposition from the building. For more information, see “Terminal loss” on page 77.

Replacement property In some cases, you can postpone or defer including a capital gain or recapture of CCA in calculating income. You might sell a business property and replace it with a similar one, or your property might be stolen, destroyed, or expropriated, and you replace it with a similar one. To defer reporting the gain or recapture of CCA, you (or a person related to you) must acquire the replacement property within the specified time limits and use the new property for the same or similar purpose.

For more information, see Income Tax Folio S3-F3-C1, Replacement Property.

You can also defer a capital gain or recapture of CCA when you transfer property to a corporation, a partnership, or your child. For more information on transferring farm property to your child, see page 100.

For more information on transfers to a corporation or a partnership, see:

■ Information Circular IC76-19, Transfer of Property to a Corporation Under Section 85

■ Interpretation Bulletin IT-291, Transfer of Property to a Corporation Under Subsection 85(1)

■ Interpretation Bulletin IT-378, Winding-up of a Partnership

■ Interpretation Bulletin IT-413, Election by Members of a Partnership Under Subsection 97(2)

Details of equity Line 9931 – Total business liabilities A liability is a debt or an obligation of a business. Total business liabilities are the total of all amounts your business owes at the end of its fiscal period.

Total business liabilities include:

■ accounts payable

■ notes payable

■ income taxes and taxes payable

■ unpaid salaries, wages, and benefits

■ interest payable

■ deferred or unearned revenues

■ loans payable

■ mortgages payable

■ any other outstanding balance related to the business

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Line 9932 – Drawings in 2019 A drawing is any withdrawal of cash (including salaries) or other assets, or services of a business by the proprietor or partners. This includes transactions by the proprietor or partners (or family members) like withdrawing cash for non-business use and using business assets and services for personal use. Include the cost or value of the personal use of business assets or services in your drawings for the year.

Line 9933 – Capital contributions in 2019 A capital contribution is cash or other assets you added to the farming business during its fiscal period. This includes personal funds you added to the business account, business debts you paid with personal funds, and personal assets you transferred to the farming business.

The following example summarizes this chapter on CCA.

Example In 2019, Trevor bought a building to use for his farming business. The total cost was $95,000 (the $90,000 total purchase price and the $5,000 total expenses connected with the purchase), as follows:

Building value $ 75,000 Land value $ 15,000 Total purchase price $ 90,000

Expenses connected with the purchase Legal fees $ 3,000 Land transfer taxes $ 2,000 Total fees $ 5,000

Trevor’s farming business has a December 31 year-end. In 2019, Trevor’s farming income was $6,000 and his expenses were $4,900. Therefore, his net income before deducting CCA was $1,100 ($6,000 – $4,900).

Before Trevor can fill in his CCA schedule, he has to calculate the capital cost of the building. Since land is not depreciable farm property, he has to calculate the part of the expenses connected with the purchase that relates only to the building. To do this, he has to use the following formula:

$75,000 × $5,000 = $4,166.67 $90,000

This $4,166.67 represents the part of the $5,000 in legal fees and land transfer taxes that relates to the purchase of the building, while the remaining $833.33 relates to the purchase of the land. Therefore, the capital cost of the building is:

Building value $ 75,000.00 Related expenses $ 4,166.67 Capital cost of the building $ 79,166.67

Trevor enters $79,166.67 in column 3 of Area C and $15,833.33 ($15,000 + $833.33) on line 9923 of Area F as the capital cost of the land.

Note Trevor did not own farm property before 2019. Therefore, he has no UCC to enter in column 2 of Area A.

Trevor acquired his farm property in 2019. Therefore, he is subject to the half-year rule that we explain under “Column 9 – Adjustment for current year additions subject to the half-year rule” on page 78.

Chapter 6 – Eligible capital expenditures As of January 1, 2017, the eligible capital property (ECP) system was replaced with the new capital cost allowance (CCA) Class 14.1 with transitional rules. Under the old system, eligible capital expenditures are added to the cumulative eligible capital pool at a 75% inclusion rate, and the rate of depreciation of those expenditures is 7% on a declining-balance basis. Under the new system, newly-acquired eligible properties will be included in Class 14.1 at a 100% inclusion rate with a 5% capital cost allowance rate on a declining-balance basis.

Property that was ECP will be depreciable property and expenditures and receipts that were accounted for under the ECP rules will be accounted for under the rules for depreciable property and capital property included in Class 14.1.

What is an eligible capital expenditure? You may buy property that does not physically exist but gives you a lasting economic benefit.

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This kind of property is eligible capital property. The price you pay to buy this type of property is an eligible capital expenditure.

We consider franchises, concessions, or licences with a limited period to be depreciable properties, not eligible capital properties. For details on depreciable properties, see Chapter 5.

What is an annual allowance? You cannot fully deduct an eligible capital expenditure because the expenditure is considered to be capital and provides a lasting economic benefit. However, you can deduct part of its cost each year. We call the amount you can deduct your annual allowance.

What is a cumulative eligible capital (CEC) account? This is the bookkeeping record you establish to determine your annual allowance. You also use your cumulative eligible capital (CEC) account to keep track of the property you buy and sell. We call the property in your CEC account your eligible capital property. You base your annual allowance on the balance in your account at the end of your fiscal period. Keep a separate account for each business. Include all eligible capital property for the one business in the same CEC account.

Transitional rules – Undepreciated capital cost balance Generally, the undepreciated capital cost (UCC) of the new class in respect of a business at the beginning of January 1, 2017, is equal to the amount that would have been the cumulative eligible capital (CEC) balance in respect of the business at the beginning of January 1, 2017.

Generally, the total capital cost of all property in Class 14.1 at the beginning of that day is deemed to be 4/3 of the total of the amount that would have been the CEC balance at the beginning of that day and past depreciation claimed that has not been recaptured before that day.

There are also rules for allocating total capital cost between goodwill property and each identifiable property in the new class that was an eligible capital property.

An amount is deemed to have been allowed as CCA before January 1, 2017, such that the UCC balance at the beginning of January 1, 2017, is equal to the amount that would have been the CEC balance at the beginning of January 1, 2017.

The determination of the total capital cost and the allocation of the capital cost of each property that was an eligible capital property before January 1, 2017, is relevant to the calculation of recaptured capital cost allowance and capital gain in respect of the disposition of such a property on or after January 1, 2017. It is not necessary to determine the total capital cost, or to allocate a capital cost to each property, to determine the amount that may be deducted.

Transitional rules – Deemed gain immediately before January 1, 2017 You may be able to include an amount in your income in a tax year that straddles January 1, 2017. The amount of the income inclusion, if any, is relevant to the calculation of the final CEC balance for the purpose of determining the total capital cost of the class. An income inclusion may be required if you receive proceeds in that tax year and prior to January 1, 2017, such that there would have been an income inclusion if the tax year had instead ended immediately before January 1, 2017. You may choose to have the income inclusion reported as business income or as a taxable capital gain.

An election to defer this income inclusion is available in a manner that is similar to the manner in which income inclusions could be deferred under the ECP rules. Where, on or after January 1, 2017, and in that tax year you acquired a property of the new class or you are deemed to have acquired goodwill, you may elect to reduce the income inclusion by up to half of the capital cost of the new property. In this case, the capital cost of the new property is then reduced by twice the amount by which the income inclusion is reduced.

Transitional rules – Dispositions of former ECP Receipts related to expenditures incurred before January 1, 2017, cannot result in excess recapture when applied to reduce the balance of the new CCA class. Certain qualifying receipts reduce the UCC of the new CCA class at a 75% rate (the rate at which eligible capital expenditures were added to CEC). Receipts that qualify for the 75% rate are generally receipts from the disposition of a property that was an ECP and receipts that do not represent the proceeds of disposition of property. This is achieved by increasing the UCC of the new class by, generally, 25% of the lesser of the proceeds of disposition and the cost of the property disposed of.

Transitional rules – Non-arm’s length dispositions of former ECP Although changes to the rules increases the UCC balance of the new class for, generally, 25% of the proceeds of disposition of property that was ECP before January 1, 2017, the new rules also prevent the use of non-arm’s length transfers to increase

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the amount that can be depreciated in respect of the new class. Generally, when you acquire a property of the new class, only 3/4 of the capital cost of the property is included in the UCC in respect of the class if the following conditions apply:

■ the property or a similar property was previously an eligible capital property of yourself or a person or partnership not dealing at arm’s length with the taxpayer

■ the UCC was increased in respect of an earlier disposition of the property or similar property by yourself or the non-arm’s length person or partnership

This effect is achieved by deeming you to have claimed CCA in respect of the new class equal to the lesser of 1/4 of the cost of the property acquired and the amount that was deemed to have been added to the UCC of the new class of yourself or another person or partnership.

For more information about the old ECP rules, see the 2016 version of this guide.

For more information on changes to the ECP system, go to budget.gc.ca/2016/docs/tm-mf/notes-en.html.

Chapter 7 – Farm losses When your farming business expenses are more than your farming business income in a year, you have a net loss. However, before you can calculate your net farm loss for the year, you may have to increase or decrease the loss by certain adjustments explained in “Line 9941 – Optional inventory adjustment – current year” on page 53 and “Line 9942 – Mandatory inventory adjustment – current year” on page 54.

If you show a net farm loss for the year, read this chapter for information on how to treat your loss. For more information on farm losses, see Income Tax Folio S4-F11-C1, Meaning of Farming and Farming Business.

The amount of the net farm loss you can deduct depends on the nature and extent of your business. Your farm loss may be one of the following:

■ fully deductible

■ restricted (partly deductible)

■ non-deductible

Fully deductible farm losses If you made your living from farming, we consider farming to be your main source of income. As long as farming was your main source of income, you can deduct the full amount of your net farm loss from other income. Farming can still be your main source of income even if your farm did not show a profit. Other income could come from investments, part-time employment, and so on.

To determine if farming was your main source of income, you need to consider such factors as:

■ gross income

■ net income

■ capital invested

■ cash flow

■ personal involvement

■ your farm’s ability to make a profit (both actual and potential)

■ plans to maintain or develop your farm and how you carried them out

Although you may have been a partner in a farming business, you still have to determine if farming was your own main source of income.

When farming is your main source of income and you show a net farm loss in 2019, you may have to reduce the loss when you have other income in 2019. Any loss that is left is your farm loss for 2019.

Example Rick’s farming business, which is his main source of income, has a December 31 fiscal year-end. His farm loss before adjustments is $50,000. He wants to reduce his loss by the optional inventory adjustment (OIA). Rick kept the following records for 2019:

Net farm loss before adjustments ..................................... $ 50,000

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Optional inventory adjustment ......................................... $ 15,000

Other income ....................................................................... $ 2,000

To reduce the loss amount, Rick adds back his OIA. He determines his farm loss for 2019 as follows:

Farm loss before adjustments ............................................ ($ 50,000)

Add optional inventory adjustment ................................. $ 15,000

Farm loss after adjustments ............................................... ($ 35,000)

Add other income ................................................................ $ 2,000

Farm loss for 2019 ................................................................ ($ 33,000)

Applying your 2019 farm loss You may have a farming loss in 2019. If you do, you can carry it back for up to 3 years or carry it forward for up to 20 years for all non-capital losses incurred after 2005. In both cases, you can deduct it from all your sources of income in those years.

If you choose to carry back your 2019 farm loss to your 2016, 2017, or 2018 income tax returns, complete form T1A, Request for Loss Carryback. Attach the completed form to your 2019 Income Tax and Benefit Return or to your request for an adjustment and send it to your tax centre. You can also send the form on its own. Do not file an amended return for the year to which you apply the loss.

Applying your farm losses from years before 2019 The 20-year carryforward is only allowed for losses starting January 1, 2006, and onward. You may be able to apply farm losses you had in any year from 2006 to 2018 on your 2019 income tax return. You can apply these losses if you did not already deduct them and you have net income in 2019. To apply these losses to 2019, you have to apply the loss from the earliest year first. Enter the amount you wish to deduct on line 25200 on your income tax return.

Restricted farm losses (partly deductible) You may have run your farm as a business. For your farm to be considered a business, you must have carried on activities with the intention of making a profit and there must be evidence to support that intention.

However, if farming was neither your main source of income (for example, you did not rely on farming alone to make your living) nor was it your main source of income in addition to some other subordinate source of income (for example, where the other source of income was a side-line employment or business), you may only be able to deduct a part of your net farm loss.

Each year you have a farm loss, review your situation carefully to see if farming was either your main source of income or it was your main source of income in addition to some other subordinate source of income. It is important to do this, since a farming loss may be restricted in one year, but not in another year.

How to calculate your restricted farm loss If farming was neither your main source of income nor your main source of income in addition to some other subordinate source of income and you had a net farm loss, the loss you can deduct depends on the amount of your net farm loss.

For tax years that end after March 20, 2013, the annual maximum deduction used in the calculation for restricted farm losses is $17,500.

When your net farm loss is $32,500 or more, you can deduct $17,500 from your other income. The rest of your net farm loss is your restricted farm loss.

When your net farm loss is less than $32,500, the amount you can deduct from your other income is the lesser of:

a) your net farm loss for the year

b) $2,500 plus 50% × (your net farm loss minus $2,500)

The amount remaining is your restricted farm loss.

Note When the farm loss you deduct is different from your actual farm loss because of the restricted farm loss calculation, you should indicate this on your income tax return on line 14099, “Farming Income.” For example, you can do this by noting “restricted farm loss,” “RFL,” or “Section 31” to the left of line 14099.

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Example Sharon ran a cattle farm with the intention of making a profit. However, farming was neither her main source of income, nor her main source of income in addition to some other subordinate source of income in 2019. In 2019, she had employment income and a net farm loss of $9,200, which she calculated on line 9946 in the “Summary of income and expenses” section of form T1273.

The part of Sharon’s net farm loss that she can deduct from her other income in 2019 is either amount A or amount B, whichever is less:

a) $9,200

b) $2,500 plus 50% × ($9,200 – $2,500) $2,500 plus 50% × $6,700

Therefore, B = ($2,500 + $3,350) = $5,850.

Because Sharon can only deduct either A or B, whichever amount is less, she enters $5,850 on line 14100 of her income tax return and deducts this amount from her other income in 2019. Her restricted farm loss is the amount that remains, which is $3,350 ($9,200 minus $5,850). Sharon prints “Section 31” to the left of line 14099 on her income tax return to show that the loss she is deducting is the result of a restricted farm loss calculation.

Applying your 2019 restricted farm loss You can carry back your 2019 restricted farm loss up to 3 years. You can also carry it forward up to 20 years.

The amount you deduct in any year cannot be more than your net farming income for that year. If you have no net farming income in any of those years, you cannot deduct any restricted farm loss.

To carry back your 2019 restricted farm loss to your 2016, 2017, or 2018 income tax returns, use form T1A, Request for Loss Carryback. Attach the completed form to your 2019 Income Tax and Benefit Return or to your request for an adjustment and send it to your tax centre. You can also send the form on its own. Do not file an amended return for the year to which you would like the loss applied.

Applying your restricted farm losses from years before 2019 The 20-year carryforward is only allowed for losses starting January 1, 2006, and onward. If you have net farming income in 2019, you may be able to apply restricted farm losses you had in any year from 2006 to 2018 on your 2019 income tax return. You can apply these losses as long as you did not already deduct them from your farming income. Also, you can only apply them up to the amount of your net farming income in 2019. You have to apply the loss from the earliest year before you apply the losses from other years. Claim this amount on line 25200 of your income tax return.

You may have sold farmland at a time when you had restricted farm losses you did not claim. When this happens, you may be able to reduce the amount of your capital gain from the sale. In this case, see “Restricted farm losses” on page 98.

Non-deductible farm losses If you did not run your farm as a business, you cannot deduct any part of your net farm loss.

The size and scope of your farm may make it impossible for the farm to make a profit, either now or in the near future. In this case, you cannot deduct your farm loss. We consider this kind of farm to be personal. Therefore, any farm expenses are personal expenses.

Non-capital losses You may have incurred a loss in 2019 from a business other than farming. If this loss is more than your other income for the year, you may have a non-capital loss. Use form T1A, Request for Loss Carryback, to calculate your 2019 non-capital loss.

You can carry back your non-capital loss up to 3 years. You can carry forward non-capital losses incurred before March 23, 2004, up to 7 years. Non-capital losses incurred after March 22, 2004, and before 2006 can be carried forward 10 years. Non-capital losses incurred after 2005 can be carried forward up to 20 years.

If you choose to carry back your 2019 non-capital loss to your 2016, 2017, or 2018 income tax returns, complete form T1A. Attach the completed form to your 2019 Income Tax and Benefit Return or to your request for an adjustment and send it to your tax centre. You can also send the form on its own. Do not file an amended return for the year to which you apply the loss.

For more information about non-capital losses, see Interpretation Bulletin IT-232, Losses – Their Deductibility in the Loss Year or in Other Years. You can view carry-over amounts using My Account at canada.ca/my-cra-account or Represent a Client at canada.ca/taxes-representatives.

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Chapter 8 – Capital gains This chapter explains the capital gains rules for people who farm. General capital gains rules are covered in guide T4037, Capital Gains.

Throughout this chapter, we use the terms sell, sold, buy, or bought. These words describe most capital transactions. However, the information in this chapter also applies to deemed dispositions or acquisitions. When reading this chapter, you can use the terms sold instead of disposed of, and bought instead of acquired, if they more clearly describe your situation.

List the dispositions of all your properties on Schedule 3, Capital Gains (or Losses) in 2019. You can get this schedule and other forms and publications at canada.ca/cra-forms, or by calling 1-800-959-5525.

You may be in a partnership and receive a T5013 slip, Statement of Partnership Income. If the partnership has a capital gain, it will allocate part of that gain to you. The gain will show on the partnership’s financial statements or on your T5013 slip.

What is a capital gain? You have a capital gain when you sell, or are considered to have sold, a capital property for more than its adjusted cost base plus the outlays or expenses you incurred to sell the property. To calculate your capital gain, subtract the adjusted cost base of your property from the proceeds of disposition. From this amount, subtract any outlays or expenses you incurred when selling your property.

In most cases, capital property includes land, buildings, and equipment that you used in your farming business. Therefore, capital property includes depreciable and non-depreciable property.

You must include your taxable capital gain in income. Not all your capital gain is taxable. For 2019, generally, your taxable capital gain is one-half of your capital gain.

A disposition of depreciable property may result in a recapture of capital cost allowance (CCA). We explain recapture on page 77.

What is a capital loss? You have a capital loss when you sell, or are considered to have sold, non-depreciable capital property for less than its adjusted cost base plus the outlays or expenses you incurred to sell the property. To calculate your capital loss, subtract the adjusted cost base of your property from the proceeds of disposition. From this amount, subtract any outlays or expenses you incurred when selling your property.

Not all your capital loss is deductible. For 2019, your allowable capital loss is one-half of your capital loss. You can only deduct an allowable capital loss from a taxable capital gain.

A loss on a disposition of depreciable property may only result in a terminal loss. We explain terminal loss on page 77.

Before you can determine your capital gain or capital loss, you will need to know the following terms.

Proceeds of disposition – in most cases means the sale price of the property, see page 72.

Adjusted cost base (ACB) – the original cost of the property (including amounts you paid to buy it, such as commissions and legal fees). ACB includes other costs such as the cost of any additions, or the cost to renovate or improve the property.

Outlays and expenses – amounts you incurred to sell your property. They include costs such as commissions, surveyors’ fees, transfer taxes, and advertising costs.

Fair market value (FMV) – generally the highest dollar value you can get for your property. We define this term on page 72.

How to calculate your capital gain or loss To calculate your capital gain or loss, use the following formula:

Proceeds of disposition $ 1

Adjusted cost base $ 2

Line 1 minus line 2 $ 3

Outlays and expenses $ 4

Capital gain (loss) = Line 3 minus line 4 $ 5

Note You have to calculate the capital gain or loss on each property separately.

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Did you sell in 2019 capital property that you owned before 1972? If you did, you have to apply a special set of rules when you calculate your capital gain or loss because you did not have to pay tax on capital gains before 1972. To help you calculate your gain or loss from the sale of property you owned before 1972, use form T1105, Supplementary Schedule for Dispositions of Capital Property Acquired Before 1972.

Disposing of farmland that includes your principal residence Your home is usually your principal residence. If your home was your principal residence for every year you owned it, you generally do not pay tax on any capital gains when you dispose of it. Therefore, if you sold farmland that included your home in 2019, only part of the gain is taxable.

The sale must be reported, along with any principal residence designation, on Schedule 3, Capital Gains (or Losses) in 2019, under “Qualified farm or fishing property” or “Real estate, depreciable properties, and other properties.” The CRA can accept a late designation in certain circumstances, but a penalty may apply.

For information on change in use rules or on deemed dispositions from a full or partial change of use of a property, see guide T4037, Capital Gains.

You can choose one of two methods to determine your taxable capital gain. Try both methods to see which one is best for you.

The land on which your home is located can be part of your principal residence. Usually, the amount of land that you can consider as part of your principal residence is limited to one half hectare (1.24 acres). If you can show that you need more land to use and enjoy your home, you can consider more than 1.24 acres as part of your principal residence. For example, this may happen if the minimum lot size imposed by a municipality at the time you bought the property is larger than one half hectare.

Method 1 Separately calculate the capital gain on your principal residence and each of your farm properties. To do this, apportion the proceeds of disposition, the ACB, and any outlays and expenses between:

■ your principal residence

■ each of your farm properties

Then, calculate the taxable capital gain on your principal residence, if any, and each of the farm properties.

Value the land that is part of your principal residence at one of the following two amounts, whichever is more:

■ the FMV of the land

■ the FMV of a comparable residential building site in the area

Note If your home was not your principal residence for every year you owned it, there could be a capital gain on it you have to include in your income. Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust), will help you calculate the number of years you are entitled to designate your home as your principal residence and calculate the part of your gain, if any, that is taxable. For more information on how to report the disposition of your principal residence, see guide T4037, Capital Gains.

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Example On February 1, 2019, Helena sold her 32-acre farm, which included her principal residence. One acre of land is part of her principal residence. Helena has these details:

Value of land when she purchased her farm FMV of similar farmland per acre .......................... $ 3,750 FMV of a typical residential

building site in the area ........................................ $ 15,000

Value of land when she sold her farm FMV of similar farmland per acre .......................... $ 6,250 FMV of a typical residential

building site in the area ........................................ $ 25,000

Adjusted cost base (ACB) – actual purchase price Land ............................................................................. $ 120,000 House ........................................................................... $ 60,000 Barn .............................................................................. $ 16,000 Silo ................................................................................ $ 4,000 Total ............................................................................. $ 200,000

Proceeds of disposition – actual sale price Land ............................................................................. $ 200,000 House ........................................................................... $ 75,000 Barn .............................................................................. $ 20,000 Silo ................................................................................ $ 5,000 Total ............................................................................. $ 300,000

Proceeds of Principal Farm Total disposition residence properties

Land $ 25,000* $ 175,000 $ 200,000 House $ 75,000 $ 75,000 Barn $ 20,000 $ 20,000 Silo $ 5,000 $ 5,000 $ 100,000 $ 200,000 $ 300,000

Minus ACB: Land $ 15,000* $ 105,000 $ 120,000 House $ 60,000 $ 60,000 Barn $ 16,000 $ 16,000 Silo $ 4,000 $ 4,000 $ 75,000 $ 125,000 $ 200,000

Gain on sale $ 25,000 $ 75,000 $ 100,000

Minus: Gain on principal residence** $ 25,000 $ 25,000

Capital gain $ 0 $ 75,000 $ 75,000

Taxable capital gain (1/2 × $75,000) $ 37,500

* Helena uses the value of a typical residential building site for the land that is part of her principal residence, because the FMV of a typical site in the area is more than the FMV of one acre of farmland.

** Because Helena’s home was her principal residence during all the years she owned it, the capital gain is not taxable.

Method 2 Determine the capital gain on your land and your principal residence. Then subtract $1,000 from the gain. Subtract an additional $1,000 for each year after 1971 that the property was your principal residence and you were a resident of Canada. Using Method 2, you can reduce a gain to nil, but you cannot create a loss.

To calculate your capital gain, use the following formula:

Proceeds of disposition $ A

Adjusted cost base $ B

Line A minus line B $ C

Outlays and expenses $ D

Capital gain before reduction (Line C minus line D) $ E

Method 2 reduction $ F

Capital gain after reduction (Line E minus line F) $ G

Note Transfer the entries on lines A, B, D, and G to the relevant columns on Schedule 3, Capital Gains (or Losses) in 2019, under “Qualified farm or fishing property” or “Real estate, depreciable properties, and other properties.”

If you choose this method, attach a letter to your income tax return that includes the following information:

■ a statement by you that you sold your farm and are electing under subparagraph 40(2)(c)(ii) of the Income Tax Act

■ a description of the property you sold

■ the number of years after 1971 that the farmhouse was your principal residence during which you were a resident of Canada (if you purchased your farm after 1971, give the date you purchased it)

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As proof of the value of your property, regardless of the method you choose, keep documents that have the following information:

■ a description of the farm, including the size of the buildings and construction type

■ the cost of the property and the date of purchase

■ the cost of any additions or improvements you made to the property

■ the assessment for property tax purposes

■ any insurance coverage

■ the type of land (arable, bush, or scrub)

■ the type of farm operation

For more information, see Income Tax Folio S1-F3-C2, Principal Residence.

Restricted farm losses You may have a capital gain from farmland you sell in 2019. You may also have restricted farm losses from previous years you have not yet used. In this case, you can deduct part of these losses from the gain. The part you can deduct is the property taxes and the interest on money you borrowed to buy the land, if you included these amounts in the calculation of the restricted farm loss in question.

You cannot use the restricted farm loss to create or increase a capital loss on the sale of your farmland.

Qualified farm or fishing property and cumulative capital gains deduction The following is a list of updated definitions effective January 1, 2014:

■ the new definition qualified farm or fishing property (QFFP) replaced the two previous definitions:

– qualified farm property (QFP)

– qualified fishing property (QXP)

■ the new definition interest in family-farm or family-fishing partnership replaced the two previous definitions:

– interest in family-farm partnership

– interest in family-fishing partnership

■ the new definition share of the capital stock of a family-farm or family-fishing corporation replaced the two previous definitions:

– share of the capital stock of a family-farm corporation

– share of the capital stock of a family-fishing corporation

What is qualified farm or fishing property? Qualified farm or fishing property (QFFP) is certain property you or your spouse or common-law partner own. It is also certain property owned by a family-farm or family-fishing partnership in which you or your spouse or common-law partner holds an interest. We define spouse and common-law partner in the Federal Income Tax and Benefit Guide.

Qualified farm or fishing property includes:

■ a real property, such as land and buildings

■ a share of the capital stock of a family-farm or family-fishing corporation you or your spouse or common-law partner owns

■ an interest in a family-farm or family-fishing partnership that you or your spouse or common-law partner owns

■ a property included in Class 14.1 used in the course of carrying on a farming or fishing business, such as milk and egg quotas

Cumulative capital gains deduction If you have a taxable capital gain from the sale of QFFP, you may be able to claim a capital gains deduction.

For dispositions in 2019, the maximum base capital gains deduction for qualifying properties is $866,912.

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The lifetime capital gains exemption (LCGE) for QFFP sold after April 20, 2015, increased to $1,000,000. The additional deduction is the difference between $500,000 (50% of $1,000,000) and the amount of the existing maximum base capital gains deduction for qualifying properties of $433,456 (50% of $866,912) for 2019. The value of this new deduction will phase out as the maximum base capital gains deduction for qualifying properties increases through indexation.

This additional deduction for taxable capital gains from the disposition of QFFP can only be used after the existing maximum base capital gains deduction that applies to both QFFP and qualified small business corporation shares ($433,456 for 2019) is used.

Existing rules on the base capital gains deduction also apply to the additional deduction for taxable capital gains from the disposition of QFFP.

Where a trust determines and designates an amount as a beneficiary’s taxable capital gain from the disposition of QFFP after April 20, 2015, the beneficiary is deemed to have a taxable capital gain of that amount from the disposition of QFFP after April 20, 2015. Therefore the additional deduction for taxable capital gains from the disposition of QFFP is available to the beneficiary.

For more information on how to calculate your capital gains deduction, see form T657, Calculation of Capital Gains Deduction for 2019, and form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2019.

You may be a partner in a partnership that sold capital property. In this case, the partnership would allocate any taxable capital gains or allowable capital losses to the partners. If you are allocated a share of a taxable capital gain on QFFP, you may be entitled to claim a capital gains deduction.

The LCGE rules on certain farming or fishing property, shares or interests include taxpayers involved in a combination of farming and fishing businesses.

■ Property held directly or through a partnership:

– Where an individual carries on a farming or fishing business as a sole proprietor, or through a partnership, in order to be eligible for the LCGE, the qualifying property must be used mainly in a farming business or a fishing business. Eligibility for the LCGE extends to property of an individual used mainly in a combination of farming and fishing.

■ Shares or partnership interests:

– In order for an individual’s shares in a family corporation or interest in a family partnership to qualify for the LCGE, all or substantially all (generally interpreted as 90% or more) of the fair market value of the property of the entity must be property used mainly in a farming business or a fishing business. A property held by a family-farm corporation or partnership that is used in a combination of farming and fishing must be used mainly in farming in order to count towards the “all or substantially all” test. A similar rule applies for a property held by a family-fishing corporation or partnership.

– Eligibility for the LCGE extends to an individual’s shares in a corporation, or interest in a partnership, where the corporation or partnership carries on both a farming business and a fishing business. In particular, if a property of the corporation or partnership is used mainly in either business, or is used mainly in a combination of farming and fishing, the property will count towards the “all or substantially” all test.

– Also, throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the entity was attributable to property. That property must have been used principally in the course of carrying on a farming or fishing business in Canada in which a qualified user was actively engaged on a regular and continuous basis, by the following:

■ you, your spouse or common-law partner, or any of your parents or children (we define children on page 100)

■ the beneficiary of a personal trust, or the spouse or common-law partner, parent, or child of such a beneficiary

■ a family-farm or family-fishing corporation where any of the above persons owns a share of the corporation

■ a family-farm or family-fishing partnership where any of the above persons (except a family-farm or family-fishing corporation) owns an interest in the partnership

Real property or property included in Class 14.1 Real property or property included in Class 14.1 is qualified farm or fishing property only if it is used to carry on a farming or fishing business in Canada by any of the following:

■ you, your spouse or common-law partner, or any of your parents or children (we define children on page 100)

■ the beneficiary of a personal trust, or the spouse or common-law partner, parent, or child of such a beneficiary

■ a family-farm or family-fishing corporation where any of the above persons owns a share of the corporation

■ a family-farm or family-fishing partnership where any of the above persons (except a family-farm or family-fishing corporation) owns an interest in the partnership

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We will consider real property or property included in Class 14.1 to be used to carry on a farming or fishing business in Canada if you meet the following conditions:

■ throughout the 24 months before the sale, you, your spouse or common-law partner, any of your children, or parents, a personal trust from which one of these persons acquired the property, or a family-farm or family-fishing partnership (in which any of these persons has an interest) must have owned the property

■ you meet one of the following two conditions:

– While the property was owned by any of the above persons in at least two years; the property or the property it replaced was mainly used in a farming or fishing business in Canada in which any of the above persons was actively engaged on a regular and ongoing basis. Also, while the property was owned by any of the above persons in at least two years; the person’s gross income from the business was larger than the person’s income from all other sources in the year.

– Family-farm or a family-fishing partnership or corporation used the property for at least 24 months, to carry on a farming or fishing business in Canada. Also, during this time, you, your spouse or common-law partner, any of your children, or your parents must have been actively engaged on a regular and ongoing basis in the business.

Real property or property included in Class 14.1 bought before June 18, 1987 You may have bought or entered into an agreement to buy real property or property included in Class 14.1 before June 18, 1987. We consider you to have used this property in carrying on a farming business in Canada if you meet one of the following conditions:

■ In the year you disposed of it, the property or the one it replaced was used in a farming business in Canada by any of the above persons, a family-farm partnership, a corporation, or by a personal trust from which one of the above individuals acquired the property.

■ The property, or the property it replaced, was used in a farming business in Canada for at least five years by any of the above persons, a family-farm partnership, or corporation, or by a personal trust from which one of the above individuals acquired the property. During this time, the property was owned by any of the above persons or a family-farm partnership or corporation.

Transfer of farm or fishing property to a child You may be able to transfer Canadian farm or fishing property to your child. When you do this, you can postpone tax on any taxable capital gain and any recapture of capital cost allowance until the child sells the property. To do this, both of these conditions have to be met:

■ your child was a resident of Canada just before the transfer

■ the farm or fishing property was land in Canada, or depreciable property in Canada of a prescribed class, in respect of a farming or fishing business carried on in Canada, and has been used in the business in which you, your spouse or common-law partner, or any of your children were actively engaged on a regular and ongoing basis before the transfer

The rules on intergenerational transfers of certain farming and fishing property from an individual to the individual’s child include taxpayers involved in a combination of farming and fishing businesses.

Where an individual carries on a farming or fishing business as a sole proprietor, or through a partnership, in order to be eligible for the intergenerational transfer, the qualifying property must be used mainly in a farming business or a fishing business. Eligibility for the intergenerational transfer extends to property of an individual used mainly in a combination of farming and fishing.

Your children include:

■ your natural child, your adopted child, or your spouse’s or common-law partner’s child

■ your grandchild or great-grandchild

■ your child’s spouse or common-law partner

■ another person who is wholly dependent on you for support and who is, or was immediately before the age of 19, in your custody and under your control

The following types of property qualify for this transfer:

■ farmland

■ depreciable property, including buildings

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Furthermore, a share of the capital stock of a family-farm or family-fishing corporation and an interest in a family-farm or family-fishing partnership also qualify for this transfer if your child is a resident of Canada just before the transfer.

The rules on intergenerational transfers of certain farming and fishing property from an individual to the individual’s child include taxpayers involved in a combination of farming and fishing businesses.

■ Shares or partnership interests:

– In order for an individual’s shares in a family corporation or interest in a family partnership to qualify for the intergenerational transfer, all or substantially all (generally interpreted as 90% or more) of the fair market value of the property of the entity must be property used mainly in a farming business or a fishing business. Eligibility for the intergenerational transfer extends to an individual’s shares in a corporation, or interest in a partnership, where the corporation or partnership carries on both a farming business and a fishing business. In particular, if a property of the corporation or partnership is used mainly in either business, or is used mainly in a combination of farming and fishing, the property will count towards the “all or substantially all” test.

For most property, the transfer price can be any amount between the adjusted cost base (ACB) and its FMV. For depreciable property, the transfer price can be any amount between its UCC and its FMV.

Example Wade wants to transfer these farm properties to Vicky, his 19-year-old daughter.

Land ACB $ 85,000 FMV at the time of transfer $ 100,000

Combine FMV $ 9,000 UCC at the time of transfer $ 7,840

Therefore, Wade can transfer the following:

■ the land at any amount between $85,000 (ACB) and $100,000 (FMV)

■ the combine at any amount between $7,840 (UCC) and $9,000 (FMV)

If Wade chooses to transfer the land at its ACB and the combine at its UCC, he postpones any taxable capital gain and any recapture of CCA. Also, if he does this, we consider that Vicky acquires the land at $85,000 and the combine at $7,840. When Vicky disposes of the land and the combine, she includes in her income any taxable capital gain and recapture that Wade postpones.

Transfer of farm or fishing property to a child if a parent dies in the year We allow a tax-free transfer of a deceased taxpayer’s Canadian farm or fishing property to a child if all of these conditions are met:

■ the child was resident in Canada just before the parent’s death

■ the property was used under the current law, mainly in a farming or fishing business on a regular and ongoing basis by the deceased, the deceased’s spouse or common-law partner, or any of the children before the parent’s death

■ the property was transferred to the child no later than 36 months after the parent’s death. In some cases, we may allow the transfer even if it took place later than 36 months after the parent’s death

Note The rules under “Transfer of farm or fishing property to a child” also apply in this section.

The following types of farm or fishing property qualify for this transfer:

■ land and buildings, or other depreciable property used mainly in a farming or fishing business

■ a share of the capital stock of a family-farm or family-fishing corporation, and an interest in a family-farm or family-fishing partnership

For most property, the transfer price can be any amount between the ACB and its FMV.

For depreciable property, the transfer price can be an amount between the property’s FMV and a special amount. For more information, see Chapter 4, “Deemed disposition of property,” in guide T4011, Preparing Returns for Deceased Persons.

The deceased’s legal representative will choose the amount in the year of death. We consider the child to acquire these properties at the amount chosen.

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Similar rules apply for property that a deceased person leased to the family-farm or family-fishing corporation or partnership.

If a child gets a farm or fishing property from a parent and the child later dies, the property can be transferred to the surviving parent based on the same rules.

Shares or other property of a family-farm or family-fishing holding corporation can also be transferred based on the same rules, from a spouse or common-law partner trust to a child of the settlor. The settlor is the person who sets up a trust, or the person who transfers property to a trust.

For more information on these transfers, see Interpretation Bulletin IT-349, Intergenerational Transfers of Farm Property on Death.

Transfer of farm or fishing property to a spouse or common-law partner A farmer can transfer farm property to a spouse or common-law partner or to a spousal or common-law partner trust during the farmer’s lifetime. At the time of transfer, the farmer can postpone any taxable capital gain or recapture of CCA.

If the spouse or common-law partner later disposes of the property, the farmer, not the spouse or common-law partner generally has to report any taxable capital gain. This rule applies where the farmer is living at the time the spouse or common-law partner sells the property. However, there are exceptions to this rule. For more information, see Interpretation Bulletin IT-511, Interspousal and Certain Other Transfers and Loans of Property.

A transfer of farm property can also occur after the farmer dies. For more information, see Chapter 4, “Deemed disposition of property,” in guide T4011, Preparing Returns for Deceased Persons.

The rollover provisions available for farm properties also apply to land and depreciable property used mainly in a woodlot farming business. They will apply where the deceased, the deceased’s spouse or common-law partner, or any of the deceased’s children were engaged in the woodlot operation as required by a prescribed forest management plan for the woodlot.

Other special rules You may also be able to postpone paying tax on capital gains in the following situations.

Reserves When you dispose of a capital property, you usually receive full payment at that time. However, sometimes you receive the amount over a number of years. Generally, a reserve allows you to defer reporting part of the capital gain to the year in which you receive the proceeds.

For example, you may sell a capital property for $50,000 and receive $10,000 at the time of the sale. You receive the remaining $40,000 over four years. In this situation, you can claim a reserve. However, there is a limit to the number of years you can do this.

For more information on reserves, see guide T4037, Capital Gains, and form T2017, Summary of Reserves on Dispositions of Capital Property.

Exchanges or expropriations of property There are special rules that apply when you dispose of a property and replace it with a similar one, or when someone expropriates your property. For more information, see Income Tax Folio S3-F3-C1, Replacement Property.

Information reporting of tax avoidance transactions Taxpayers, advisors and promoters who engage in or who are entitled to certain fees in relation to certain tax avoidance transactions are subject to new reporting requirements.

The measures apply to certain avoidance transactions entered into after 2010, and avoidance transactions that are part of a series of transactions that started before 2011 and were completed after 2010.

A transaction will be reportable if it is an avoidance transaction as defined in subsection 245(3) of the Income Tax Act for purposes of the general anti-avoidance rule (GAAR) and has at least two of the following three characteristics:

■ the advisor or promoter has or had an entitlement to certain types of fees

■ the advisor or promoter has or had confidential protection with respect to the transaction

■ the taxpayer or the advisor or promoter (including any non-arm’s length parties) has or had contractual protection for the transaction (other than as a result of certain types of fees)

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A reportable transaction does not include a transaction that is, or is part of, a series of transactions that includes the acquisition of a tax shelter or issuance of a flow-through share for which an information return has been filed with the minister under subsections 237.1(7) or 66(12.68), respectively.

Information return RC312, Reportable Transaction Information Return, must be filed on June 30 of the calendar year following the calendar year in which the transaction first became a reportable transaction for the person. An extended reassessment period is allowed under paragraph 152(4)(b.1) of the Income Tax Act.

Failure to report could result in suspension of the tax benefit and a penalty.

File this return separately from your tax return. Before you file it, make a copy for your records. Send the original return, amended return, or any additional information to:

Winnipeg Tax Centre Data Assessment and Evaluation Programs Validation and Verification Section Foreign Reporting Returns PO Box 14001, Station Main Winnipeg MB R3C 3M3

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Commodity list

Commodity Code

Grains, oilseeds, and special crops Barley 003

Beans (dry edible) 004

Borage 006

Buckwheat 007

Camelina 282

Canadian Wheat Board payments 002

Canary seed 008

Canola 010

Chick peas/Garbanzo beans 023

Corn 011

Faba beans 012

Field peas 013

Flaxseed 014

Forage (including pellets, silage) 264

Forage seed 015

Grain (pellets, screenings, silage) 039

Hemp 030

Kenaf 317

Khorasan wheat/Kamut 036

Lathyrus 040

Lentils 041

Lupins 042

Millet 043

Mixed grain 024

Mustard seed 044

Niger seed/Niger thistle 283

Oats 045

Oilseed radish 038

Prepared feed and protein supplements (itemized) 046

Quinoa 047

Rice 048

Rye 049

Safflower 050

Soybeans 053

Spelt 037

Straw 267

Sugar beets (including molasses) 268

Sunflowers 054

Tobacco 269

Triticale 055

Vegetable seed (seed production only) 051

Wheat 056

Edible horticulture Flowers (edible) 180

Hops 383

Mushrooms (including spawn) 131

Nuts (all) 140

Weeds (edible) 211

Berries Blackberries 066

Blueberries 067

Cranberries 068

Currants (black, red) 065

Elderberries 074

Gooseberries 069

Haskap 075

Loganberries 070

Raspberries 071

Saskatoon berries 072

Sea buckthorn 076

Strawberries 073

Fruit Apples 060

Apricots 091

Cantaloupe 168

Cherries (sweet, sour) 092

Fruit juice 081

Grapefruit 082

Grapes 083

Kiwi fruit 084

Lemons 085

Melons 185

Nectarines 093

Oranges 086

Peaches 094

Pears 095

Plums 096

Prunes 097

Watermelon 087

Wine 088

Herbs and spices Anise 101

Basil 102

Caraway seed 103

Chervil 158

Chives 104

Cilantro 105

Comfrey 106

Coriander 107

Cumin 144

Dill 108

Echinacea 142

Fennel 110

Fenugreek 111

Fireweed 377

Garlic 113

Gingko biloba 380

Ginseng 114

Lavender 379

Lemon balm 378

Marjoram 115

Mint 116

Monarda 117

Oregano 118

Parsley 119

Pepper 120

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Rosemary 121

Sage 122

Salsify 123

St. John’s wort 381

Summer savory 125

Tarragon 126

Thyme 127

Watercress 128

Vegetables Artichokes 160

Arugula/Rocket 195

Asparagus 161

Beans, fresh 025

Beets 162

Bok choi 163

Broccoflower 164

Broccoli 165

Brussels sprouts 166

Cabbage 167

Carrots 169

Cauliflower 170

Celery 171

Chinese vegetables 173

Collards 174

Cucumbers 175

Eggplant 176

Endive 177

Fiddleheads 179

Gherkins 221

Green peas 223

Horseradish 181

Kale 214

Kohlrabi 182

Leeks 183

Lettuce 184

Mustard leaves 186

Okra 227

Onions 187

Parsnip 190

Peppers 191

Potatoes and by-products 147

Pumpkins 192

Radish 193

Rhubarb 194

Rutabagas 197

Shallots 198

Spinach 201

Squash 202

Stevia 230

Sweet corn 203

Sweet peas 204

Sweet potatoes/Yams 205

Swiss chard 206

Tomatoes 207

Turnips 208 Vegetable marrow 209

Witloof chicory 212 Zucchini 213

Vegetables – Greenhouse Cherry tomatoes 233

Cucumbers 234

Lettuce 235

Peppers 236

Tomatoes 237

Non-edible horticulture Bedding plants 132

Flowers and ornamental foliage 133

Fruits and vegetables (non-edible) 134

Seeds and bulbs 135

Shrubs 136

Sod 137

Trees (cultivated Christmas) 138

Trees (fruit and ornamental) 139

Income feed Custom feedlot operator income

Custom feedlot operator income (itemized invoices) – Qualifying feed and protein supplements

243

Custom feedlot operator income (non-itemized invoices) – Qualifying prepared feed 246

Other custom feeding income (itemized) 576

Expense feed Livestock owners and custom feedlot operators with prepared feed purchases

Other feed charges (itemized) 570

Prepared feed and protein supplements (itemized) 046

Prepared feed and purchases (non-itemized) 571

Livestock owners and custom feeding expense Custom feeding expenses (non-itemized) 573 Livestock owners custom feeding expense (itemized) – Qualifying feed and protein supplements

577

Other custom feeding expenses (itemized) 572

Ranch fur operators with prepared feed purchases Prepared feed and protein supplements (itemized) 046 Ranch fur operators feed purchases (non-itemized) 574

Ranch fur operators other feed expenses (itemized) 310

Poultry, fowl, ratites Chickens 366

Chickens (non-supply managed) 590

Chickens, eggs (non-supply managed) 589

Chickens, eggs for consumption 343

Chickens, eggs for hatching 344

Ducks 332

Emus 373

Geese 333

Ostriches 371

Partridge 323

Pheasants 338

Pigeons 327

Quail 324

Rheas 372

Silkies 326

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Taiwanese chickens 325

Turkeys 334

Turkeys (non-supply managed) 591

Turkey eggs 342

Prescribed drought region (PDR)/Prescribed flood region (PFR)/CFIA livestock codes

Deferred bison 151

Deferred bovine cattle 150

Deferred deer 154

Deferred elk 155

Deferred goat 152

Deferred horse for PMU sales 156

Deferred other breeding animals 157

Deferred sheep 153

Livestock Alpacas 370

Bees, honey 374

Bees, leaf cutter 312

Bison 350

Cattle, calves 719

Cattle, cows and bulls 706

Cattle, fat/slaughter 720

Cattle, feeder 721

Cattle, purebred breeding 722

Chinchilla 240

Deer 352

Dogs (kennels and pet breeding excluded) 313

Donkeys/Mules 367

Elk 353

Fox 241

Goats 354

Groundhogs/Hedgehogs 369

Horses 316

Llamas 355

Mink 242

Pot bellied pigs 239

Rabbits 356

Reindeer 244

Sheep, ewes and rams 734

Sheep, lambs 723

Swine 341

Wild boar 247

Other products Bee by-products 375

Cannabis 382

Elk velvet 764

Fish meal 263

Honey 129

Manure 318

Maple products 130

Milk and cream (cattle) 319

Milk and cream (non-supply managed) 592

Pollination services fee 376

Pregnant mare urine (PMU) 322

Semen and embryos 712

Wood 259

Wool 328

Note For information on any commodities not included in this listing, contact your Administration.

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Program payment list A See the following lists to determine the correct code to report the program payment on form T1273 or form T1274.

For AgriStability, program payments received from programs on the following list are included when calculating your AgriStability program year production margin. For AgriInvest, only program payments on the following list that are received directly for the loss of an allowable commodity (for example, AgriInsurance (production/crop/hail insurance), private insurance for eligible commodities or wildlife damage compensation) are included when calculating your Allowable Net Sales.

Program payment – included in AgriStability and AgriInvest calculations Code

AgriInsurance/crop/production or hail insurance – Edible horticulture crops 402

AgriInsurance/crop/production or hail insurance – Grains, oilseeds, and special crops 401

AgriInsurance/crop/production or hail insurance – Non-edible horticulture crops 470

AgriInsurance/crop/production or hail insurance – Other commodities, including livestock 463

Canadian Food Inspection Agency (CFIA) payment for allowable commodities 663

Livestock feed insurance program 412

Private insurance proceeds for allowable commodities 661

Waterfowl/Wildlife damage compensation – Grains, oilseeds, and special crops 418

Waterfowl/Wildlife damage compensation – Horticulture 419

Waterfowl/Wildlife damage compensation – Other commodities 425

Western livestock price insurance program (WLPIP) 667

Program payment – included in AgriStability calculations Code

Canadian Food Inspection Agency (CFIA) payment for other amounts 665

Canadian Food Inspection Agency (CFIA) payment for supply managed commodities 664

Cover crop protection program 473

Cull breeding swine program (all provinces) 582

Insurance proceeds for allowable expense items 406

Other AgriRecovery program (allowable income)* 627

Alberta

2016 Canada – Alberta bovine tuberculosis assistance initiative (allowable income) 674

Nova Scotia

2016 Canada – Nova Scotia fire blight initiative 673

2018 Nova Scotia frost loss program 678

Ontario

Ontario special beekeepers fund 552

Prince Edward Island

2018 Canada-PEI fall harvest recovery initiative 680

Saskatchewan

2016 Canada-Saskatchewan bovine tuberculosis assistance initiative 675

Saskatchewan cattle and hog support program 593

* This code should only be used for AgriRecovery programs (allowable income for AgriStability) not specifically listed above.

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Program payment list B Program payments received from programs on the following list are not included in calculating your AgriStability program year production margin or your Allowable Net Sales for AgriInvest.

Program payment Code Alternate land use services (ALUS) 557

Apple industry growth and efficiency program 669

Canadian agricultural skills service (CASS) 561

Canadian farm business advisory service (CFBAS) 562

Canadian Food Inspection Agency (CFIA) payments – Compensation for non-allowable commodities 587

Dairy subsidies 435

Green plan, farm-based program – Permanent cover practices 466

Hog farm transition program 607

Industry transition production assistance program 478

Market revenue insurance (MRI) – Non-edible horticulture crops 474

Market revenue insurance (MRI) – Qualifying edible horticulture crops 411

Market revenue insurance (MRI) – Qualifying grains, oilseeds, and special crops 410

Other AgriRecovery program (non-allowable income)* 632

Production insurance premium adjustment 499

Special farm assistance 560

Tobacco transition program 606

Transitional financial assistance program (TFA) 427

Young farmer rebate 559

Alberta

2016 Canada – Alberta bovine tuberculosis assistance initiative (non-allowable income) 676

Alberta spring price endorsement 495

British Columbia

2014 Canada – British Columbia avian influenza assistance initiative 670

2017 Canada – British Columbia wildfire recovery initiative 677

2018 Canada – British Columbia wildfire recovery initiative 679

Manitoba

Manitoba farmland school tax rebate program 556

Nova Scotia

2016 Canada – Nova Scotia maple sector initiative 672

Ontario

Canada – Ontario grain and oilseed payment 410

Canada – Ontario grain stabilization payment 410

Ontario cattle, hog and horticulture payment 581

Ontario cost recognition top-up 553

Ontario-edible horticulture support/program payment 475

Ontario grain and oilseed program payment 471

Ontario inventory transition payment program 441

Ontario risk management program (including the self-directed risk management program) 565

Saskatchewan

Saskatchewan crop insurance premium adjustment 619

* This code should only be used for AgriRecovery programs (non-allowable income for AgriStability) not specifically listed above.

canada.ca/taxes 109

Inventory code list To find the code for your commodity, locate the name of your commodity and look under the column for your province.

■ If the box is blank, the code cannot be used in your province.

■ If the box is marked with an X, use this code on your form. The Administration will assign a price for the commodity. You can submit your own price for this commodity only if you meet the criteria outlined in this guide.

■ If the box is shaded, use this code on your form. You must provide your own price for this commodity. For more information, refer to the guide.

Edible horticulture

Code Description BC MB NB NL NS YT

6850 Anise

5030 Apples

5031 Apples, organic

5032 Apricots

5034 Artichokes

6851 Arugula

6998 Asparagus

6852 Basil

6978 Bean, lima

6980 Bean, mung

6970 Beans, adzuki

6972 Beans, broad

6974 Beans, green

6975 Beans, green, organic

6976 Beans, Jacob

6982 Beans, snap

6983 Beans, snap, fresh

6984 Beans, soldier

6986 Beans, wax

7000 Beets

5000 Blackberries

5060 Blueberries, highbush (non-bearing year)

5059 Blueberries, highbush (planting year)

5061 Blueberries, highbush (years 1 to 2 of production)

5062 Blueberries, highbush (years 3 to 6 of production)

5063 Blueberries, highbush (years 7 to 9 of production)

5064 Blueberries, highbush (years 10+ of production)

5004 Blueberries, lowbush

5099 Blueberries, lowbush (burn/sprout/mow)

5095 Blueberries, lowbush (establishment stage)

5098 Blueberries, lowbush (mature/full production)

5096 Blueberries, lowbush (primary production – 1st and 2nd harvest crop)

5097 Blueberries, lowbush (secondary production – 3rd and 4th harvest crop)

7002 Bok choi

110 canada.ca/taxes

Code Description BC MB NB NL NS YT

6854 Borage

7004 Broccoflower

7006 Broccoli

7008 Brussels sprouts

7010 Cabbage

7012 Cabbage, Chinese

5036 Cantaloupes

7014 Carrots

7015 Carrots, organic

7016 Cauliflower

7018 Celery

5038 Cherries, sour

5040 Cherries, sweet

6855 Chervil

6856 Chives

6858 Cilantro

7020 Collards

6860 Comfrey

6862 Coriander

7022 Corn, sweet

5006 Cranberries

4990 Cranberries (establishment stage)

4991 Cranberries, 1st year of production

4992 Cranberries, 2nd year of production

4993 Cranberries, 3rd year of production

4994 Cranberries, 4+ years of production

7024 Cucumbers

7026 Cucumbers, English

7028 Cucumbers, greenhouse

6864 Cumin

5007 Currants, black

5009 Currants, red

6866 Dill

6869 Echinacea, establishment

6867 Echinacea, root harvested

7035 Edible flowers

7030 Eggplant

7031 Eggplant, greenhouse

5010 Elderberries

7032 Endive

6870 Evening primrose

6872 Fennel

6874 Fenugreek

7034 Fiddle heads

canada.ca/taxes 111

Code Description BC MB NB NL NS YT

6876 Fireweed

7036 Garlic

7037 Garlic, organic

7038 Gherkins

6893 Gingko biloba

6879 Ginseng, establishment stage

6877 Ginseng, root harvested

5012 Gooseberries

7069 Gourds

5042 Grapefruit

4996 Grapes (non-bearing year)

4995 Grapes (planting year)

4997 Grapes (year 1 of production)

4998 Grapes (year 2+ of production)

5021 Haskap

7039 Hazelnuts

4780 Hops establishment (planting year 1)

4781 Hops, year 2

4782 Hops, year 3

4783 Hops, year 4+

7040 Horseradish, condiment

7042 Horseradish, enzyme

7099 Kale, organic

6920 Kenaf

5044 Kiwi fruit

7044 Kohlrabi

6883 Lavender

7046 Leeks

7047 Leeks, organic

6881 Lemon balm

5046 Lemons

7048 Lettuce

7050 Lettuce, greenhouse

7049 Lettuce, organic

7052 Lettuce, romaine

5016 Loganberries

6930 Maple syrup

6931 Maple syrup, vacuum

6880 Marjoram

7054 Melons

6882 Mint

6884 Monarda

6928 Mushrooms, brown

6929 Mushrooms, white

112 canada.ca/taxes

Code Description BC MB NB NL NS YT

6934 Mustard leaves

5048 Nectarines

6936 Oilseed, radish

6922 Okra

7056 Onions

7057 Onions, organic

5050 Oranges

6886 Oregano

6888 Parsley

7058 Parsnips

5052 Peaches

5054 Pears

7060 Peas, green, fresh

7062 Peas, sweet

7064 Peppers, green

7066 Peppers, greenhouse

5056 Plums

7204 Potatoes, elite 1

7206 Potatoes, elite 2

7200 Potatoes, mini-tuber

6991 Potatoes, organic

7202 Potatoes, pre-elite

6990 Potatoes, processing

6992 Potatoes, seed

6994 Potatoes, sweet

6996 Potatoes, table

5058 Prunes

7068 Pumpkin

7070 Radish

6938 Radish seed, fodder

6940 Radish seed, organic

5018 Raspberries

7072 Rhubarb

6933 Rice, wild

6892 Rosemary

7074 Rutabagas

6894 Sage

7076 Salsify

5020 Saskatoon berries

7078 Scorzonera

5022 Sea buckthorn, berries

6988 Sea buckthorn, leaves

7080 Shallots

7082 Spinach

canada.ca/taxes 113

Code Description BC MB NB NL NS YT

7083 Spinach, organic

7084 Squash

6896 St. John’s wort

6898 Stevia

5024 Strawberries

6946 Sugar beets

6900 Summer savory

7086 Swiss chard

7087 Swiss chard, organic

6902 Tarragon

6903 Thyme

6948 Tobacco

7088 Tomatoes

7090 Tomatoes, cherry, greenhouse

7092 Tomatoes, greenhouse

7094 Turnips

7097 Walnuts

6904 Watercress

7096 Watermelon

5066 Wine (bottled)

5067 Wine (bulk/pre-bottled)

7098 Zucchini

Forage

Code Description BC MB NB NL NS YT

5560 Alfalfa, dehy

5562 Greenfeed

5564 Hay, alfalfa

5568 Hay, alfalfa/brome

5570 Hay, alfalfa/grass

5566 Hay, alfalfa, organic

5572 Hay, clover

5574 Hay, grass

5576 Hay, other

5578 Hay, slough

5579 Hay, timothy

5580 Haylage

5582 Millet

5584 Silage

5583 Silage, corn

5586 Straw

5588 Swath grazing

114 canada.ca/taxes

Forage seed

Code Description BC MB NB NL NS YT

5600 Alfalfa, common seed

5603 Alfalfa, organic, seed

5602 Alfalfa, pedigreed seed

5604 Bentgrass, common seed

5606 Bentgrass, pedigreed seed

5608 Birdsfoot trefoil, common seed

5610 Birdsfoot trefoil, pedigreed seed

5736 Black medic

5612 Blue grama, common seed

5614 Blue grama, pedigreed seed

5724 Bromes, meadow, common seed

5726 Bromes, meadow, pedigreed seed

5723 Bromes, smooth, common seed

5725 Bromes, smooth, pedigreed seed

5729 Chickling vetch, seed

5620 Clover, alsike, common seed

5622 Clover, alsike, pedigreed seed

5624 Clover, kura, common seed

5626 Clover, kura, pedigreed seed

5619 Clover, organic, seed

5628 Clover, other, common seed

5732 Clover, red, common seed, double cut

5731 Clover, red, common seed, single cut

5734 Clover, red, pedigreed seed, double cut

5733 Clover, red, pedigreed seed, single cut

5636 Clover, sweet, common seed

5638 Clover, sweet, pedigreed seed

5640 Fescue, meadow, common seed

5642 Fescue, meadow, pedigreed seed

5727 Fescue, red, creeping, common seed

5728 Fescue, red, creeping, pedigreed seed

5644 Fescue, tall, forage, common seed

5646 Fescue, tall, forage, pedigreed seed

5648 Fescue, tall, turf, common seed

5650 Fescue, tall, turf, pedigreed seed

5652 Fescues, other, common seed

5671 Grass, fowl blue

5656 Grass, green needle, common seed

5658 Grass, green needle, pedigreed seed

5660 Grass, Indian, common seed

5662 Grass, Indian, pedigreed seed

5664 Grass, June, common seed

5666 Grass, June, pedigreed seed

canada.ca/taxes 115

Code Description BC MB NB NL NS YT

5668 Grass, Kentucky blue, common seed

5670 Grass, Kentucky blue, pedigreed seed

5672 Grass, orchard, common seed

5674 Grass, orchard, pedigreed seed

5676 Grass, other, common seed

5680 Grass, reed canary, common seed

5682 Grass, reed canary, pedigreed seed

5684 Grass, switch, common seed

5686 Grass, switch, pedigreed seed

5688 Grass, tufted hair, common seed

5690 Grass, tufted hair, pedigreed seed

5592 Grass, wheat, crested, common seed

5596 Grass, wheat, crested, pedigreed seed

5593 Grass, wheat, intermediate common seed

5597 Grass, wheat, intermediate pedigreed seed

5595 Grass, wheat, pubescent common seed

5599 Grass, wheat, pubescent pedigreed seed

5594 Grass, wheat, slender common seed

5598 Grass, wheat, slender pedigreed seed

5699 Milkvetch, American

5697 Milkvetch, Canada

5696 Milkvetch, common seed

5698 Milkvetch, pedigreed seed

5700 Millet, common seed

5702 Millet, pedigreed seed

5693 Native wheatgrass, northern

5695 Native wheatgrass, streambank

5691 Native wheatgrass, western

5683 Native, bluestem, big

5685 Native, bluestem, little

5659 Native, needle and thread

5689 Native, prairie cordgrass

5687 Native, prairie sandreed

5615 Native, sideoats grama

5742 Niger thistle

5704 Ryegrass, annual, common seed

5706 Ryegrass, annual, pedigreed seed

5709 Ryegrass, native, Canadian wild

5708 Ryegrass, perennial, common seed

5714 Ryegrass, perennial, pedigreed seed

5716 Sainfoin, common seed

5718 Sainfoin, pedigreed seed

5730 Sloughgrass, American

5720 Timothy, common seed

116 canada.ca/taxes

Code Description BC MB NB NL NS YT

5722 Timothy, pedigreed seed

Grains and oilseeds

Code Description BC MB NB NL NS YT

5100 Barley X X

5233 Barley, CW select six-row X

5238 Barley, CW select two-row X

5101 Barley, feed (>=48 lbs/bu.) X

5102 Barley, feed (42 lbs/bu. to 47 lbs/bu.) X

5195 Barley, feed (off board) X

5200 Barley, organic

5205 Barley, organic six-row

5206 Barley, organic six-row, pedigreed

5210 Barley, organic two-row

5211 Barley, organic two-row, pedigreed

5204 Barley, organic, feed

5215 Barley, pedigreed seed

5220 Barley, pedigreed seed six-row

5225 Barley, pedigreed seed two-row

5368 Beans, black

5370 Beans, black, no. 1

5372 Beans, black, no. 2

5374 Beans, black, no. 3

5369 Beans, black, organic

5375 Beans, black, pedigreed seed

5376 Beans, brown, no. 1

5378 Beans, brown, no. 2

5380 Beans, brown, no. 3

5382 Beans, brown, organic

5384 Beans, brown, pedigreed seed

5386 Beans, cranberry, no. 1

5388 Beans, cranberry, no. 2

5390 Beans, cranberry, no. 3

5392 Beans, cranberry, organic

5394 Beans, cranberry, pedigreed seed

5405 Beans, dry, red kidney

5468 Beans, dry, yellow eye

5446 Beans, feed

5396 Beans, great northern, no. 1

5398 Beans, great northern, no. 2

5400 Beans, great northern, no. 3

5402 Beans, great northern, organic

5404 Beans, great northern, pedigreed seed

canada.ca/taxes 117

Code Description BC MB NB NL NS YT

5406 Beans, kidney, dark red, no. 1

5408 Beans, kidney, dark red, no. 2

5410 Beans, kidney, dark red, no. 3

5412 Beans, kidney, dark red, organic

5414 Beans, kidney, dark red, pedigreed seed

5416 Beans, kidney, light red, no. 1

5418 Beans, kidney, light red, no. 2

5420 Beans, kidney, light red, no. 3

5422 Beans, kidney, light red, organic

5424 Beans, kidney, light red, pedigreed seed

5426 Beans, pink, no. 1

5428 Beans, pink, no. 2

5430 Beans, pink, no. 3

5432 Beans, pink, organic

5434 Beans, pink, pedigreed seed

5436 Beans, pinto, no, 1

5438 Beans, pinto, no. 2

5440 Beans, pinto, no. 3

5442 Beans, pinto, organic

5444 Beans, pinto, pedigreed seed

5448 Beans, small red, no. 1

5450 Beans, small red, no. 2

5452 Beans, small red, no. 3

5454 Beans, small red, organic

5456 Beans, small red, pedigreed seed

5457 Beans, white pea (navy)

5458 Beans, white pea (navy), no. 1

5460 Beans, white pea (navy), no. 2

5462 Beans, white pea (navy), no. 3

5464 Beans, white peas (navy), organic

5466 Beans, white peas (navy), pedigreed seed

5240 Buckwheat, no. 1

5242 Buckwheat, no. 2

5244 Buckwheat, no. 3

5246 Buckwheat, organic

5248 Buckwheat, pedigreed seed

5540 Camelina

5542 Camelina, organic

5544 Camelina, pedigreed seed

5250 Canary seed X

5252 Canary seed, organic

5254 Canary seed, pedigreed seed

5260 Canola, Argentine

5262 Canola, Argentine, no. 1 X X

118 canada.ca/taxes

Code Description BC MB NB NL NS YT

5264 Canola, Argentine, no. 2 X X

5266 Canola, Argentine, no. 3

5268 Canola, Argentine, organic

5270 Canola, Argentine, pedigreed seed

5272 Canola, Argentine, sample

5274 Canola, Polish

5276 Canola, Polish, no. 1 X X

5278 Canola, Polish, no. 2 X X

5280 Canola, Polish, no. 3

5282 Canola, Polish, organic

5284 Canola, Polish, pedigreed seed

5286 Canola, Polish, sample

5290 Caraway seed

5292 Caraway seed, organic

5294 Caraway seed, pedigreed seed

5300 Chickpeas, desi, no. 1 X

5302 Chickpeas, desi, no. 2 X

5303 Chickpeas, desi, no. 3

5304 Chickpeas, desi, organic

5306 Chickpeas, desi, pedigreed seed

5330 Chickpeas, feed

5310 Chickpeas, large kabuli (average), no. 1 X

5312 Chickpeas, large kabuli (average), no. 2 X

5314 Chickpeas, large kabuli (average), no. 3

5316 Chickpeas, large kabuli, organic

5318 Chickpeas, large kabuli, pedigreed seed

5322 Chickpeas, small kabuli, no. 1 X

5324 Chickpeas, small kabuli, no. 2 X

5325 Chickpeas, small kabuli, no. 3

5326 Chickpeas, small kabuli, organic

5328 Chickpeas, small kabuli, pedigreed seed

5340 Corn, grain X X X

5342 Corn, grain, organic

5344 Corn, grain, pedigreed seed

5360 Fababeans, feed

5350 Fababeans, no. 1

5352 Fababeans, no. 2

5354 Fababeans, no. 3

5356 Fababeans, organic

5358 Fababeans, pedigreed seed

5550 Flax X X

5552 Flax, organic

5553 Flax, organic, pedigreed seed

5554 Flax, pedigreed seed

canada.ca/taxes 119

Code Description BC MB NB NL NS YT

5556 Flax, sample

6826 Harvest discount allowance

5750 Hemp, fiber

5752 Hemp, grain

5754 Hemp, pedigreed seed

5070 Kamut

5072 Kamut, organic

5074 Kamut, pedigreed seed

5822 Lentils, black, organic

5760 Lentils, dark green speckled, extra no. 3 X

5762 Lentils, dark green speckled, no. 1 X

5764 Lentils, dark green speckled, no. 2 X

5766 Lentils, dark green speckled, no. 3 X

5768 Lentils, dark green speckled, organic

5770 Lentils, dark green speckled, pedigreed

5820 Lentils, feed

5772 Lentils, large green, extra no. 3 X

5774 Lentils, large green, no. 1 X

5776 Lentils, large green, no. 2 X

5778 Lentils, large green, no. 3 X

5780 Lentils, large green, organic

5782 Lentils, large green, pedigreed seed

5784 Lentils, medium green, extra no. 3 X

5786 Lentils, medium green, no. 1 X

5788 Lentils, medium green, no. 2 X

5790 Lentils, medium green, no. 3 X

5792 Lentils, medium green, organic

5794 Lentils, medium green, pedigreed seed

5821 Lentils, organic, pedigreed seed

5796 Lentils, red, extra no. 3 X

5798 Lentils, red, no. 1 X

5800 Lentils, red, no. 2 X

5802 Lentils, red, no. 3 X

5804 Lentils, red, organic

5806 Lentils, red, pedigreed seed

5808 Lentils, small green, extra no. 3 X

5810 Lentils, small green, no. 1 X

5812 Lentils, small green, no. 2 X

5814 Lentils, small green, no. 3 X

5816 Lentils, small green, organic

5818 Lentils, small green, pedigreed seed

5830 Linola

5832 Linola, organic

5834 Linola, pedigreed seed

120 canada.ca/taxes

Code Description BC MB NB NL NS YT

5836 Linola, sample

5840 Mixed grain

5841 Mixed grain, organic

5850 Mustard, brown, no. 1 X

5852 Mustard, brown, no. 2 X

5854 Mustard, brown, no. 3 X

5856 Mustard, brown, no. 4 X

5858 Mustard, brown, organic

5860 Mustard, brown, pedigreed seed

5862 Mustard, oriental, no. 1 X

5864 Mustard, oriental, no. 2 X

5866 Mustard, oriental, no. 3 X

5868 Mustard, oriental, no. 4 X

5870 Mustard, oriental, organic

5872 Mustard, oriental, pedigreed seed

5874 Mustard, sample

5876 Mustard, yellow, no. 1 X

5878 Mustard, yellow, no. 2 X

5880 Mustard, yellow, no. 3 X

5882 Mustard, yellow, no. 4 X

5884 Mustard, yellow, organic

5886 Mustard, yellow, pedigreed seed

5968 Niger seed

5900 Oats X X X X

5902 Oats, organic

5903 Oats, organic, pedigreed seed

5904 Oats, pedigreed seed

5906 Oats, sample

5500 Peas, dry, feed X X

5502 Peas, dry, feed, organic

5504 Peas, dry, food, green, no. 1 X

5506 Peas, dry, food, green, no. 2 X

5508 Peas, dry, food, green, organic

5510 Peas, dry, food, yellow, no. 1 X

5512 Peas, dry, food, yellow, no. 2 X

5514 Peas, dry, food, yellow, organic

5516 Peas, dry, maple

5518 Peas, dry, marrowfat

5520 Peas, dry, pedigreed seed

5076 Quinoa

5078 Quinoa, organic

5080 Quinoa, pedigreed seed

5259 Rapeseed, high erucic acid

5910 Rye, fall X

canada.ca/taxes 121

Code Description BC MB NB NL NS YT

5912 Rye, fall, organic

5914 Rye, fall, pedigreed seed

5916 Rye, spring X

5918 Rye, spring, organic

5920 Rye, spring, pedigreed seed

5930 Safflower, no. 1

5932 Safflower, organic

5934 Safflower, pedigreed seed

5936 Safflower, sample

5907 Screenings, all crops

5908 Screenings, all crops, organic

5940 Soybeans X

5942 Soybeans, organic

5944 Soybeans, pedigreed seed

5946 Soybeans, sample

5082 Spelt

5084 Spelt, organic

5086 Spelt, pedigreed seed

5950 Sunflower, confectionary, birdseed

5952 Sunflower, confectionary, no. 1 X

5954 Sunflower, confectionary, no. 2 X

5956 Sunflower, feed

5964 Sunflower, organic

5958 Sunflower, pedigreed seed

5960 Sunflowers, oilseed, no. 1 X

5962 Sunflowers, oilseed, no. 2 X

5970 Sunola

5972 Sunola, organic

5974 Sunola, pedigreed seed

5980 Triticale

5982 Triticale, organic

5984 Triticale, pedigreed seed

6000 Wheat X X

6295 Wheat, CNHR, no. 1

6296 Wheat, CNHR, no. 2 & 3

6200 Wheat, CPS X

6730 Wheat, CPS red, organic

6735 Wheat, CPS red, pedigreed seed

6740 Wheat, CPS white, organic

6745 Wheat, CPS white, pedigreed seed

6202 Wheat, CPSR, no. 1 X

6204 Wheat, CPSR, no. 2 X

6210 Wheat, CWAD, no. 1 X X

6212 Wheat, CWAD, no. 2 X

122 canada.ca/taxes

Code Description BC MB NB NL NS YT

6215 Wheat, CWAD, no. 3 X

6217 Wheat, CWAD, no. 4

6750 Wheat, CWAD, organic

6755 Wheat, CWAD, pedigreed seed

6225 Wheat, CWES

6770 Wheat, CWES, organic

6775 Wheat, CWES, pedigreed seed

6810 Wheat, CWHW, organic

6815 Wheat, CWHW, pedigreed seed

6235 Wheat, CWHWS, no. 1

6242 Wheat, CWHWS, no. 2

6245 Wheat, CWHWS, no. 3

6255 Wheat, CWRS, no. 1 X X

6262 Wheat, CWRS, no. 2 X X

6270 Wheat, CWRS, no. 3 X

6272 Wheat, CWRS, no. 4

6780 Wheat, CWRS, organic

6782 Wheat, CWRS, organic, pedigreed seed

6785 Wheat, CWRS, pedigreed seed

6275 Wheat, CWRW X

6276 Wheat, CWRW, no. 1 X

6277 Wheat, CWRW, no. 2 X

6495 Wheat, CWRW, organic

6500 Wheat, CWRW, pedigreed seed

6790 Wheat, CWRWS, organic

6795 Wheat, CWRWS, pedigreed seed

6290 Wheat, CWSP

6285 Wheat, CWSWS X

6800 Wheat, CWSWS, organic

6805 Wheat, CWSWS, pedigreed seed

6001 Wheat, feed (> = 58 lbs./bu.) X

6002 Wheat, feed (52 lbs./bu. to 57 lbs./bu.) X

6726 Wheat, feed, organic

6725 Wheat, non-CWB, feed X

6820 Wheat, organic

6825 Wheat, pedigreed seed

Inedible horticulture

Code Description BC MB NB NL NS YT

6959 Bedding plants

5001 Blackberry plants

5005 Blueberry plants

6961 Christmas trees, (1st to 2nd years)

canada.ca/taxes 123

Code Description BC MB NB NL NS YT

6962 Christmas trees, (3rd to 5th years)

6963 Christmas trees, (6th to 9th years)

6964 Christmas trees, (9+ years)

6960 Christmas trees, (establishment)

6966 Christmas trees, natural stand, harvested

6965 Christmas trees, natural stand, pre-harvest

5011 Currants, bushes

6951 Flowers, fresh cut

6949 Flowers, fresh cut, greenhouse

7110 Perennials, 1 gallon, field/container

7112 Perennials, 2 gallon, field/container

7140 Perennials, 7 gallon, field/container

7142 Perennials, 10 gallon, field/container

7144 Perennials, 15 gallon, field/container

7146 Perennials, 25 gallon, field/container

7148 Perennials, 30 gallon, field/container

7106 Perennials, 1 gallon, indoor

7108 Perennials, 2 gallon, indoor

7103 Perennials, 2.5 inch

7104 Perennials, 4 inch

7102 Perennials, plugs/liners

7130 Perennials, potted, indoor

7132 Perennials, potted, outdoor, nursery

7134 Perennials, rootstock, field grown

7101 Plants, potted

6957 Raspberry plants (canes)

7073 Rhubarb plants

6943 Sod, acres growing

6945 Sod, acres harvested

6937 Sod, acres harvested (BC Coastal Regions)

6941 Sod, acres seeded

6956 Strawberry, plants

7124 Trees and shrubs, 1 gallon, field/container

7126 Trees and shrubs, 2 gallon, field/container

7128 Trees and shrubs, 5 gallon, field/container

7118 Trees and shrubs, 1 gallon, indoor

7120 Trees and shrubs, 2 gallon, indoor

7122 Trees and shrubs, 5 gallon, indoor

7116 Trees and shrubs, 4 inch

7117 Trees and shrubs, ball and burlap, field

7129 Trees and shrubs, caliper, field stock

7115 Trees and shrubs, high value ball and burlap, field stock

7114 Trees and shrubs, plugs/liners

124 canada.ca/taxes

Bees and bee by products

Code Description BC MB NB NL NS YT

7603 Bees, pollen

7600 Beeswax

7604 Honey

7606 Honey bees

7608 Honey bees, nuclear colony

7610 Honey bees, package

7616 Leaf cutter bees

Bison

Code Description BC MB NB NL NS YT

7902 Bison, breeding, bulls

7904 Bison, breeding, cows

7908 Bison, calves, bull

7910 Bison, calves, heifer

7924 Bison, two year old, bulls

7926 Bison, two year old, heifers

7928 Bison, yearling, bulls

7930 Bison, yearling, heifers

Cattle

Code Description BC MB NB NL NS YT

8000 Beef, breeding, bulls

8002 Beef, breeding, cows X X

8007 Beef, calves, birth – 300 lbs X X

8060 Beef, feeder, cows

8032 Beef, heifer, feeder, 301 – 400 lbs X X

8036 Beef, heifer, feeder, 401 – 500 lbs X X

8040 Beef, heifer, feeder, 501 – 600 lbs X X

8044 Beef, heifer, feeder, 601 – 700 lbs X X

8048 Beef, heifer, feeder, 701 – 800 lbs X X

8052 Beef, heifer, feeder, 801 – 900 lbs X X

8056 Beef, heifer, feeder, 901 – 1000 lbs X X

8014 Beef, heifer, feeder, 1001 – 1100 lbs X X

8018 Beef, heifer, feeder, 1101 – 1200 lbs X X

8022 Beef, heifer, feeder, 1201 – 1300 lbs X X

8028 Beef, heifer, feeder, 1301 + lbs X X

8062 Beef, replacement heifers (bred animals) X X

8034 Beef, steer, feeder, 301 – 400 lbs X X

8038 Beef, steer, feeder, 401 – 500 lbs X X

8042 Beef, steer, feeder, 501 – 600 lbs X X

8046 Beef, steer, feeder, 601 – 700 lbs X X

8050 Beef, steer, feeder, 701 – 800 lbs X X

canada.ca/taxes 125

Code Description BC MB NB NL NS YT

8054 Beef, steer, feeder, 801 – 900 lbs X X

8058 Beef, steer, feeder, 901 – 1000 lbs X X

8016 Beef, steer, feeder, 1001 – 1100 lbs X X

8020 Beef, steer, feeder, 1101 – 1200 lbs X X

8024 Beef, steer, feeder, 1201 – 1300 lbs X X

8026 Beef, steer, feeder, 1301 – 1400 lbs X X

8030 Beef, steer, feeder, 1401 + lbs X X

8063 Cattle, semen

8100 Purebred beef, 301 – 400 lbs, bulls

8104 Purebred beef, 401 – 500 lbs, bulls

8108 Purebred beef, 501 – 600 lbs, bulls

8112 Purebred beef, 601 – 700 lbs, bulls

8116 Purebred beef, 701 – 800 lbs, bulls

8120 Purebred beef, 801 – 900 lbs, bulls

8124 Purebred beef, 901 – 1000 lbs, bulls

8082 Purebred beef, 1001 – 1100 lbs, bulls

8086 Purebred beef, 1101 – 1200 lbs, bulls

8090 Purebred beef, 1201 – 1300 lbs, bulls

8092 Purebred beef, 1301 – 1400 lbs, bulls

8096 Purebred beef, 1401 lbs +, bulls

8098 Purebred beef, 301 – 400 lbs, heifers

8102 Purebred beef, 401 – 500 lbs, heifers

8106 Purebred beef, 501 – 600 lbs, heifers

8110 Purebred beef, 601 – 700 lbs, heifers

8114 Purebred beef, 701 – 800 lbs, heifers

8118 Purebred beef, 801 – 900 lbs, heifers

8122 Purebred beef, 901 – 1000 lbs, heifers

8080 Purebred beef, 1001 – 1100 lbs, heifers

8084 Purebred beef, 1101 – 1200 lbs, heifers

8088 Purebred beef, 1201 – 1300 lbs, heifers

8094 Purebred beef, 1301 lbs +, heifers

8070 Purebred beef, breeding, bulls

8072 Purebred beef, breeding, cows

8077 Purebred beef, calves, birth – 300 lbs

8071 Purebred beef, embryo

8127 Purebred beef, heifers, bred

8128 Purebred beef, replacement heifers

Dairy

Code Description BC MB NB NL NS YT

8200 Dairy quota, butterfat

8202 Dairy quota, milk

8204 Dairy, breeding, bulls

126 canada.ca/taxes

Code Description BC MB NB NL NS YT

8206 Dairy, breeding, cows

8210 Dairy, calves, heifer

8212 Dairy, calves, steer

8236 Dairy, feeder 301 – 400 lbs, heifers

8240 Dairy, feeder 401 – 500 lbs, heifers

8244 Dairy, feeder 501 – 600 lbs, heifers

8248 Dairy, feeder 601 – 700 lbs, heifers

8252 Dairy, feeder 701 – 800 lbs, heifers

8256 Dairy, feeder 801 – 900 lbs, heifers

8260 Dairy, feeder 901 – 1000 lbs, heifers

8218 Dairy, feeder 1001 – 1100 lbs, heifers

8222 Dairy, feeder 1101 – 1200 lbs, heifers

8226 Dairy, feeder 1201 – 1300 lbs, heifers

8232 Dairy, feeder 1301 lbs +, heifers

8238 Dairy, feeder 301 – 400 lbs, steers

8242 Dairy, feeder 401 – 500 lbs, steers

8246 Dairy, feeder 501 – 600 lbs, steers

8250 Dairy, feeder 601 – 700 lbs, steers

8254 Dairy, feeder 701 – 800 lbs, steers

8258 Dairy, feeder 801 – 900 lbs, steers

8262 Dairy, feeder 901 – 1000 lbs, steers

8220 Dairy, feeder 1001 – 1100 lbs, steers

8224 Dairy, feeder 1101 – 1200 lbs, steers

8228 Dairy, feeder 1201 – 1300 lbs, steers

8230 Dairy, feeder 1301 – 1400 lbs, steers

8234 Dairy, feeder 1401 lbs +, steers

8266 Dairy, replacement heifers

8302 Purebred dairy, 301 – 400 lbs, bulls

8306 Purebred dairy, 401 – 500 lbs, bulls

8310 Purebred dairy, 501 – 600 lbs, bulls

8314 Purebred dairy, 601 – 700 lbs, bulls

8318 Purebred dairy, 701 – 800 lbs, bulls

8322 Purebred dairy, 801 – 900 lbs, bulls

8326 Purebred dairy, 901 – 1000 lbs, bulls

8284 Purebred dairy, 1001 – 1100 lbs, bulls

8288 Purebred dairy, 1101 – 1200 lbs, bulls

8292 Purebred dairy, 1201 – 1300 lbs, bulls

8294 Purebred dairy, 1301 – 1400 lbs, bulls

8298 Purebred dairy, 1401 lbs +, bulls

8300 Purebred dairy, 301 – 400 lbs, heifers

8304 Purebred dairy, 401 – 500 lbs, heifers

8308 Purebred dairy, 501 – 600 lbs, heifers

8312 Purebred dairy, 601 – 700 lbs, heifers

8316 Purebred dairy, 701 – 800 lbs, heifers

canada.ca/taxes 127

Code Description BC MB NB NL NS YT

8320 Purebred dairy, 801 – 900 lbs, heifers

8324 Purebred dairy, 901 – 1000 lbs, heifers

8282 Purebred dairy, 1001 – 1100 lbs, heifers

8286 Purebred dairy, 1101 – 1200 lbs, heifers

8290 Purebred dairy, 1201 – 1300 lbs, heifers

8296 Purebred dairy, 1301 lbs +, heifers

8272 Purebred dairy, breeding, bulls

8274 Purebred dairy, breeding, cows

8278 Purebred dairy, calves, heifer

8280 Purebred dairy, calves, steers

8327 Purebred dairy, heifers, bred

8328 Purebred dairy, replacement heifers

Goats

Code Description BC MB NB NL NS YT

8902 Goats, breeding, bucks

8904 Goats, breeding, does

8912 Goats, kids (<=65 lbs)

8910 Goats, kids (>=66 lbs)

8916 Purebred goats, breeding, bucks

8918 Purebred goats, breeding, does

8922 Purebred goats, kids (<=65 lbs)

8920 Purebred goats, kids (>=66 lbs)

Horses

Code Description BC MB NB NL NS YT

8558 Horses, breeding, mares

8560 Horses, breeding, studs

8562 Horses, colts

8569 Horses, geldings

8567 Horses, mares

8561 Horses, semen

8570 Horses, slaughter

8572 Pregnant mare urine produced (PMU)

8574 Purebred horses, breeding, mares

8576 Purebred horses, breeding, studs

8578 Purebred horses, colts

8582 Purebred horses, slaughter

Other livestock

Code Description BC MB NB NL NS YT

7502 Alpaca, breeding, hembras

7504 Alpaca, breeding, machos

128 canada.ca/taxes

Code Description BC MB NB NL NS YT

7506 Alpaca, cria, hembras

7508 Alpaca, cria, machos

7516 Alpaca, fibre

8134 Breeding females, leased (not owned)

8602 Chinchillas, breeding, females

8604 Chinchillas, breeding, males

8600 Chinchillas, pelts

8402 Deer, breeding, bucks

8404 Deer, breeding, does

8410 Deer, fawn, bucks

8412 Deer, fawn, does

8416 Deer, feeder, bucks

8418 Deer, feeder, does

8421 Deer, hunt, bucks

8419 Deer, semen

8420 Deer, yearling, bucks

8422 Deer, yearling, does

8555 Donkey, geldings

8550 Donkey, jackass

8551 Donkey, jackass, registered

8552 Donkey, jennys

8553 Donkey, jennys, registered

8452 Elk, breeding, bulls

8454 Elk, breeding, cows

8456 Elk, bulls producing velvet

8460 Elk, calves, bull

8462 Elk, calves, heifer

8453 Elk, hunt, bulls

8469 Elk, semen

8470 Elk, velvet

8474 Elk, yearling, heifers

8476 Elk, yearling, spikers

8629 Fox, breeding, reynards

8631 Fox, breeding, vixens

8627 Fox, pelts

8637 Fox, pups

7552 Llama, breeding, females

7554 Llama, breeding, males

7556 Llama, cria, females

7558 Llama, cria, males

7566 Llama, fibre

8654 Mink, breeding, females

8656 Mink, breeding, males

8662 Mink, kits

canada.ca/taxes 129

Code Description BC MB NB NL NS YT

8652 Mink, pelts

8557 Mule, johns

8556 Mule, mollys

8677 Rabbits, breeding, bucks

8679 Rabbits, breeding, does

8691 Rabbits, fryers

8687 Rabbits, kits

8693 Rabbits, stewers

8423 Red deer, breeding, bulls

8424 Red deer, breeding, cows

8425 Red deer, bulls, producing velvet

8426 Red deer, calves bull

8427 Red deer, calves heifer

8430 Red deer, feeder, heifers

8436 Red deer, hunt, bulls

8431 Red deer, semen

8432 Red deer, velvet

8433 Red deer, yearling, heifers

8434 Red deer, yearling, spikers

8502 Reindeer, breeding, bulls

8504 Reindeer, breeding, cows

8508 Reindeer, calves, bull

8510 Reindeer, calves, heifers

8512 Reindeer, feeder, bulls

8514 Reindeer, feeder, heifers

8520 Reindeer, trained

8516 Reindeer, yearling, bulls

8518 Reindeer, yearling, heifers

8852 Wild boar, breeding, boars

8854 Wild boar, breeding, sows

8856 Wild boar, finishers

8858 Wild boar, growers

8862 Wild boar, weanlings

Poultry

Code Description BC MB NB NL NS YT

7680 Chickens (up to 1.4 kg)

7681 Chickens (over 1.4 kg up to 2.7 kg)

7682 Chickens (over 2.7 kg)

7677 Chickens, broilers, chicks hatched

7667 Chickens, chicks

7654 Chickens, layers, broiler eggs for hatching

7678 Chickens, layers, chicks hatched

130 canada.ca/taxes

Code Description BC MB NB NL NS YT

7656 Chickens, layers, eggs for consumption

7658 Chickens, pullets

7660 Chickens, roosters

7702 Ducks, broilers

7706 Ducks, drakes

7708 Ducks, ducklings

7712 Ducks, eggs

7714 Ducks, hens

7664 Eggs for consumption

7665 Eggs for consumption, organic

7663 Eggs for hatching

7752 Geese, broilers

7758 Geese, eggs

7760 Geese, female

7762 Geese, ganders

7764 Geese, goslings

7793 Partridge, broilers

7798 Partridge, eggs for hatching

7800 Partridge, hens

7795 Partridge, pullets

7796 Partridge, roosters

7804 Pheasant, chicks

7810 Pheasant, eggs

7812 Pheasant, hens

7811 Pheasant, ring neck, broilers

7814 Pheasant, rooster

7813 Pheasant, white, broilers

7825 Pigeon, breeding pair

7820 Pigeon, pullets

7818 Pigeon, squab roasters

7670 Purebred chickens, layers, broiler eggs for hatching

7672 Purebred chickens, layers, eggs for consumption

7674 Purebred, chickens, pullets

7676 Purebred, chickens, roosters

7852 Purebred turkeys, chicks

7856 Purebred turkeys, eggs

7858 Purebred turkeys, hens

7860 Purebred turkeys, toms

7888 Quail, broilers

7893 Quail, eggs for hatching

7890 Quail, pullets

7891 Quail, roosters

7842 Silkies, broilers

7900 Silkies, chicks

canada.ca/taxes 131

Code Description BC MB NB NL NS YT

7847 Silkies, eggs for hatching

7899 Silkies, hens

7844 Silkies, pullets

7845 Silkies, roosters

7880 Taiwanese chickens, broilers

7887 Taiwanese chickens, chicks

7885 Taiwanese chickens, eggs for hatching

7877 Taiwanese chickens, hens

7882 Taiwanese chickens, pullets

7883 Taiwanese chickens, roosters

7861 Turkeys (up to 6.2 kg)

7863 Turkeys (over 6.2 kg up to 8.5 kg)

7865 Turkeys (over 8.5 kg up to 10.8 kg)

7867 Turkeys (over 10.8 kg up to 13.3 kg)

7869 Turkeys (over 13.3 kg)

7870 Turkeys, eggs

7872 Turkeys, hens

7871 Turkeys, poults, breeding

7873 Turkeys, poults, broilers

7876 Turkeys, toms

Ratites

Code Description BC MB NB NL NS YT

7727 Emu, boomers

7729 Emu, chicks

7737 Emu, eggs

7739 Emu, flyers

7741 Emu, slaughter

7777 Ostrich, chicks

7783 Ostrich, eggs

7785 Ostrich, hens

7787 Ostrich, roosters

7789 Ostrich, slaughter

7827 Rheas, chicks

7833 Rheas, eggs

7835 Rheas, hens

7837 Rheas, roosters

7839 Rheas, slaughter

Sheep

Code Description BC MB NB NL NS YT

8966 Purebred sheep, breeding, ewes

8968 Purebred sheep, breeding, rams

132 canada.ca/taxes

Code Description BC MB NB NL NS YT

8972 Purebred sheep, lambs

8952 Sheep, breeding, ewes

8954 Sheep, breeding, rams

8962 Sheep, lambs (<=79 lbs)

8960 Sheep, lambs (>=80 lbs)

8976 Wool

Swine

Code Description BC MB NB NL NS YT

8752 Hogs, breeding, boars

8754 Hogs, breeding, sows X X

8763 Hogs, feeder, birth – 18 lbs X X

8764 Hogs, feeder, 19 lbs – 36 lbs X X

8765 Hogs, feeder, 37 lbs – 65 lbs X X

8766 Hogs, feeder, 66 lbs – 100 lbs X X

8767 Hogs, feeder, 101 lbs – 140 lbs X X

8768 Hogs, feeder, 141 lbs – 180 lbs X X

8769 Hogs, feeder, 181 lbs – 220 lbs X X

8770 Hogs, feeder, 221 lbs – 240 lbs X X

8791 Hogs, feeder, 241 lbs – 260+ lbs X X

8755 Hogs, gilts

8771 Hogs, semen

8774 Purebred hogs, breeding, boars

8776 Purebred hogs, breeding, sows

8789 Purebred hogs, gilts

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Regional code list

British Columbia

District number

District name

23 Alberni-Clayoquot

51 Bulkley-Nechako

17 Capital

41 Cariboo

45 Central Coast

3 Central Kootenay

35 Central Okanagan

39 Columbia-Shuswap

26 Comox Valley

19 Cowichan Valley

1 East Kootenay

9 Fraser Valley

53 Fraser-Fort George

15 Greater Vancouver

49 Kitimat-Stikine

5 Kootenay Boundary

43 Mount Waddington (Island part)

21 Nanaimo

37 North Okanagan

59 Northern Rockies

7 Okanagan-Similkameen

55 Peace River

27 Powell River

47 Skeena-Queen Charlotte

31 Squamish-Lillooet

57 Stikine

24 Strathcona

29 Sunshine Coast

33 Thompson-Nicola

Manitoba

Municipality number

Municipality name

600 Alexander

601 Alonsa

102 Argyle

602 Armstrong

105 Bifrost-Riverton

153 Boissevain-Morton

109 Brenda-Waskada

110 Brokenhead

Manitoba

Municipality number Municipality name

112 Cartier

167 Cartwright-Roblin

114 Clanwilliam-Erickson

115 Coldwell

116 Cornwallis

118 Dauphin

119 De Salaberry

205 Deloraine-Winchester

120 Dufferin

121 East St. Paul

101 Ellice-Archie

124 Elton

127 Emerson-Franklin

126 Ethelbert

605 Fisher

323 Gilbert Plains

129 Gimli

187 Glenboro-South Cypress

142 Glenella-Lansdowne

606 Grahamdale

132 Grandview

111 Grassland

133 Grey

331 Hamiota

135 Hanover

609 Harrison Park

208 Headingley

182 Hillsburg-Roblin-Shell River

604 Kelsey

196 Killarney-Turtle Mountain

138 La Broquerie

139 Lac Du Bonnet

143 Lakeshore

144 Lorne

145 Louise

146 Macdonald

147 McCreary

149 Minitonas-Bowsman

159 Minto-Odanah

151 Montcalm

152 Morris

134 canada.ca/taxes

Manitoba

Municipality number Municipality name

154 Mossey River

617 Mountain

188 Norfolk Treherne

155 North Cypress-Langford

156 North Norfolk

999 Northern Region

157 Oakland-Wawanesa

107 Oakview

161 Pembina

610 Piney

162 Pipestone

163 Portage La Prairie

192 Prairie Lakes

403 Prairie View

611 Reynolds

164 Rhineland

181 Riding Mountain West

165 Ritchot

443 Riverdale

168 Rockwood

169 Roland

170 Rosedale

353 Rossburn

172 Rosser

445 Russell-Binscarth

184 Sifton

449 Souris-Glenwood

189 Springfield

174 St. Andrews

176 St. Clements

177 St. Francois Xavier

178 St. Laurent

190 Stanley

175 Ste. Anne

359 Ste. Rose

612 Stuartburn

193 Swan Valley West

194 Tache

195 Thompson

122 Two Borders

197 Victoria

198 Victoria Beach

Manitoba

Municipality number Municipality name

199 Wallace-Woodworth

185 West Interlake

201 West St. Paul

200 Westlake-Gladstone

202 Whitehead

203 Whitemouth

590 Winnipeg, City

206 Woodlands

183 Yellowhead

New Brunswick

County number County name

6 Albert

11 Carleton

2 Charlotte

15 Gloucester

8 Kent

5 Kings

13 Madawaska

9 Northumberland

4 Queens

14 Restigouche

1 St. John

3 Sunbury

12 Victoria

7 Westmorland

10 York

Nova Scotia

County number County name

5 Annapolis

14 Antigonish

17 Cape Breton

10 Colchester

11 Cumberland

3 Digby

13 Guysbourough

9 Halifax

8 Hants

15 Inverness

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Nova Scotia

County number County name

7 Kings

6 Lunenburg

12 Pictou

4 Queens

16 Richmond

1 Shelburne

18 Victoria

2 Yarmouth

Yukon

District number

District name

1 Dawson-Mayo

2 Kluane

3 Pelly-Faro-Carmacks

4 Watson Lake

5 Whitehorse

Units of measurement code list

Code Description

4 Bushels

16 CWT

5 Kilograms

10 Litres

64 Other

Code Description

8 Bales, large

7 Bales, small

1 Pounds

2 Tonnes

Expense code list

Code Expenses

9815 Arm’s length salaries

9836 Commissions and levies

9661 Containers and twine

9799 Electricity

9662 Fertilizer and soil supplements

9801 Freight and shipping

9802 Heating fuel

Code Expenses

9665 Insurance premiums (crop or production)

9764 Machinery (gasoline, diesel fuel, oil)

9714 Minerals and salts

9663 Pesticides and chemical treatments

9953 Private insurance premiums for allowable commodities

9822 Storage/drying

9713 Veterinary fees, medicine, and breeding fees

136 canada.ca/taxes

Productive capacity list

Code Description Units

100 Alpaca Number of females that have birthed

101 Bison Number of females that have birthed

159 Blue leg, breeder hatching eggs Number of producing hens

158 Blue leg, broilers Number sold

104 Cattle Number of females that have birthed

171 Cattle, bred heifers Number sold

143 Chicken, broilers Number of kg produced

108 Chicken, layers, broiler eggs for hatching Number of producing hens

109 Chicken, layers, eggs for consumption Number of producing hens

157 Chicken, Taiwanese, breeder, hatching eggs Number of producing hens

156 Chicken, Taiwanese, broilers Number sold

197 Chickens, pullets Number of animals fed

193 Chinchillas Number of females that have birthed

181 Custom fed bison Number of animal feed days

141 Custom fed cattle Number of animal feed days

198 Custom fed chickens pullets Number of animals fed

184 Custom fed goats Number of animal feed days

142 Custom fed hogs Number of animal feed days

200 Custom fed mink Number of animals fed

182 Custom fed sheep Number of animal feed days

190 Custom feeders elk Number of animal feed days

113 Milk quota, milkfat Number of kg of butterfat/day

115 Deer Number of females that have birthed

175 Deer, feeders Number of animals fed

178 Donkeys Number of females that have birthed

168 Ducks, breeder hatching eggs Number of producing hens

116 Ducks, broiler Number sold

117 Elk Number of females that have birthed

118 Elk, bulls producing velvet Number of bulls producing

173 Elk, feeders Number of animals fed

119 Emu Number of females that have birthed

102 Feeder bison (fed up to 700 lbs) Number of animals fed

103 Finished bison (fed over 700 lbs) Number of animals fed

105 Feeder cattle (fed up to 900 lbs) Number of animals fed

106 Finished cattle (fed over 900 lbs) Number of animals fed

112 Feeder dairy cattle (fed up to 900 lbs) Number of animals fed

111 Finished dairy cattle (fed over 900 lbs) Number of animals fed

194 Fox Number of females that have birthed

169 Geese, breeder hatching eggs Number of producing hens

121 Geese, broiler Number sold

122 Goats Number of females that have birthed

191 Goats, dairy Number of females in milk producing herd

canada.ca/taxes 137

Code Description Units

183 Goats, feeders Number of animals fed

123 Hogs, farrow to finish Number of females that have birthed

145 Hogs, farrowing Number of females that have birthed

124 Hogs, feeders (fed over 50 lbs) Number of animals fed

180 Hogs, gilts Number sold

125 Hogs, nursery (fed up to 50 lbs) Number of animals fed

126 Honey bees, producing (hives) Number of hives producing

176 Horse, feeders Number of animals fed

127 Horses Number of females that have birthed

129 Leaf cutter bees, producing (gallons) Number of gallons of bees pollinating

130 Llama Number of females that have birthed

195 Mink Number of females that have birthed

132 Ostrich Number of females that have birthed

161 Partridge, breeder hatching eggs Number of producing hens

160 Partridge, broilers Number sold

163 Pheasant, ring neck, breeder hatching eggs Number of producing hens

162 Pheasant, ring neck, broilers Number sold

165 Pheasant, white, breeder, hatching eggs Number of producing hens

164 Pheasant, white, broilers Number sold

128 Pregnant mare urine (PMU) produced Number of grams contracted

167 Quail, breeder hatching eggs Number of producing hens

166 Quail, broilers Number sold

196 Rabbits Number of females that have birthed

187 Red deer Number of females that have birthed

186 Red deer, bulls producing velvet Number of bulls producing

136 Reindeer Number of females that have birthed

137 Rheas Number of females that have birthed

151 Semen, cattle Number of straws sold

152 Semen, deer Number of straws sold

150 Semen, elks Number of straws sold

149 Semen, hogs Number of straws sold

192 Semen, horse Number of straws sold

188 Semen, red deer Number of straws sold

138 Sheep Number of females that have birthed

172 Sheep, feeders Number of animals fed

155 Silkies, breeder, hatching eggs Number of producing hens

154 Silkies, broilers Number sold

170 Squab, breeding set Number of breeding sets

153 Turkey, breeder, hatching eggs Number of producing hens

144 Turkey, broilers Number of kg produced

199 Turkey, poults Number of poults hatched

140 Wild boar Number of females that have birthed

177 Wild Boar, finishers Number of animals fed

138 canada.ca/taxes

Capital cost allowance (CCA) rates Below you will find the more common depreciable properties that a business may use along with the class of each property. The CCA rates appear at the end of the list. For more information on Classes 13, 14, 34, and 43.1, and Part XVII of the Income Tax Act, call us at 1-800-959-5525.

Depreciable property Class No. Depreciable property Class No.

Aircraft – Acquired before May 26, 1976 16 Aircraft – Acquired after May 25, 1976 9 Bee equipment 8 Boats and component parts 7 Breakwaters

Cement or stone 3 Wood 6

Brooders 8 Buildings and component parts

Wood, galvanized, or portable 6 Other: Acquired after 1978 and before 1988* 3 Acquired after 1987 1 Fruit and vegetable storage (after Feb. 19, 1973) 8

Casing, cribwork for water wells 8 Chain-saws 10 Cleaners – grain or seed 8 Combines

Drawn 8 Self-propelled 10

Computer equipment and systems software Acquired before March 23, 2004 10 Acquired after March 22, 2004 45 Acquired after March 18, 2007 50 Acquired after January 27, 2009, and before February 2011 52

Computer software (other than systems software) 8 Coolers – Milk 8 Cream separators 8 Cultivators 8 Dams

Cement, stone, wood, or earth 1 Data network infrastructure equipment – Acquired

after March 22, 2004 46 Diggers – All types 8 Discs 8 Docks 3 Drills – All types 8 Dugouts, dikes, and lagoons 6 Electric-generating equipment – portable 8 Electric motors 8 Elevators 8 Engines – Stationary 8 Fences – All types 6 Forage harvesters

Drawn 8 Self-propelled 10

Graders – Fruit or vegetable 8 Grain-drying equipment 8 Grain loaders 8 Grain separators 8 Grain-storage building

Wood, galvanized steel 6 Other 1

Greenhouses (all except as noted below) 6 Greenhouses of rigid frames covered with replaceable

flexible plastic 8 Grinder 8 Harness 10 Harrows 8 Hay balers and stookers

Drawn 8 Self-propelled 10

Hay loaders 8 Ice machines 8 Incubators 8 Irrigation equipment – Overhead 8 Irrigation ponds 6 Leasehold interest 13 Manure spreaders 8 Milking machines 8 Mixers 8 Mowers 8 Nets 8 Office equipment including photocopiers, fax machines 8 Outboard motors 10 Passenger vehicles (see Chapter 4) 10 or 10.1 Piping – Permanent 2 Planters – All types 8 Plows 8 Power block – Purse seine 7 Pumps 8 Radar or radio equipment

Acquired before May 26, 1976 9 Acquired after May 25, 1976 8

Rakes 8 Roads or other surface areas – Paved or concrete 17 Silo fillers 8 Silos 8 Sleighs 10 Sprayers 8 Stable cleaners 8 Stalk cutters 8 Swathers

Drawn 8 Self-propelled 10

Threshers 8 Tile or concrete drainage system – Acquired before 1965 13 Tillers – All types 8 Tools

Less than $500 12 $500 and more 8

Tractors 10 Trailers 10 Traps 8 Trucks 10 Trucks (freight) 16

canada.ca/taxes 139

Depreciable property Class No.

Wagons 10 Water towers 6 Weeders 8 Weirs 3 Weirs – Fish 8 Welding equipment 8 Well equipment 8 Wharves

Cement, steel, or stone 3 Wood 6

Depreciable property Class No.

Wind chargers 8 Wind-energy conversion equipment

Acquired before February 22, 1994 34 Acquired after February 21, 1994 43.1

(Note: Class 43.1 can be used other than for wind energy.) Zero-emission vehicles that would otherwise be

in Class 10 or 10.1 54 Zero-emission vehicles that would otherwise

be in Class 16 55

* You may add to or alter a Class 3 building after 1987. In this case, there is a limit on the amount you can include in Class 3. The most you can include in Class 3 is the lesser of $500,000 or 25% of the building’s cost on December 31, 1987. In Class 1, include any costs you incur that are over this limit.

Class 1 ................................... 4% Class 2 ................................... 6% Class 3 ................................... 5% Class 6 ................................. 10% Class 7 ................................. 15%

Class 8 ................................. 20% Class 9 ................................. 25% Class 10 ............................... 30% Class 10.1 ............................ 30%

Class 12 ............................ 100% Class 13** Class 45 .............................. 45% Class 46 .............................. 30%

Class 50 ............................... 55% Class 52 ............................. 100% Class 54 ............................... 30% Class 55 ............................... 40%

** You can claim CCA on leasehold interest, but the maximum rate depends on the type of leasehold interest and the terms of the lease.

140 canada.ca/taxes

How to calculate the mandatory inventory adjustment (MIA) For instructions on how to fill in the following charts, see page 54 in Chapter 3.

Chart 1 Cash cost of purchased inventory

Enter the amount you paid by the end of the 2019 fiscal period for the specified animals you bought:

Fiscal period Cash cost

■ in your 2019 fiscal period $ 1

■ in your 2018 fiscal period $ 2

■ in your 2017 fiscal period $ 3

■ in your 2016 fiscal period $ 4

■ before your 2016 fiscal period $ 5

Enter the amount you paid by the end of your 2019 fiscal period for all other inventory you bought:

■ in your 2019 fiscal period $ 6

■ in your 2018 fiscal period $ 7

■ in your 2017 fiscal period $ 8

■ in your 2016 fiscal period $ 9

■ before your 2016 fiscal period $ 10

Chart 2 Value of purchased inventory for specified animals

Inventory bought in your 2019 fiscal period Enter an amount that is not more than the amount on line 1 but not less than 70% of this amount. $ 11

Inventory bought in your 2018 fiscal period Enter an amount that is not more than the amount on line 2, but not less than 70% of the total of the value at the end of your 2018 fiscal period plus any amounts you paid in your 2019 fiscal period toward the purchase price. $ 12

Inventory bought in your 2017 fiscal period Enter an amount that is not more than the amount on line 3, but not less than 70% of the total of the value at the end of your 2018 fiscal period plus any amounts you paid in your 2019 fiscal period toward the purchase price. $ 13

Inventory bought in your 2016 fiscal period Enter an amount that is not more than the amount on line 4, but not less than 70% of the total of the value at the end of your 2018 fiscal period plus any amounts you paid in your 2019 fiscal period toward the purchase price. $ 14

Inventory bought before your 2016 fiscal period Enter an amount that is not more than the amount on line 5, but not less than 70% of the total of the value at the end of your 2018 fiscal period plus any amounts you paid in your 2019 fiscal period toward the purchase price. $ 15

Chart 3 Value of purchased inventory for all

other inventory

Inventory bought in your 2019 fiscal period Enter the amount from line 6 or the fair market value, whichever is less. $ 16

Inventory bought in your 2018 fiscal period Enter the amount from line 7 or the fair market value, whichever is less. $ 17

Inventory bought in your 2017 fiscal period Enter the amount from line 8 or the fair market value, whichever is less. $ 18

Inventory bought in your 2016 fiscal period Enter the amount from line 9 or the fair market value, whichever is less. $ 19

Inventory bought before your 2016 fiscal period Enter the amount from line 10 or the fair market value, whichever is less. $ 20

Chart 4 Calculation of MIA

Enter the amount of your net loss from line 9969 of form T1273 or T1274. $ 21

Enter the value of your inventory from Chart 2 and Chart 3:

■ the amount from line 11 $

■ the amount from line 12 $

■ the amount from line 13 $

■ the amount from line 14 $

■ the amount from line 15 $

■ the amount from line 16 $

■ the amount from line 17 $

■ the amount from line 18 $

■ the amount from line 19 $

■ the amount from line 20 $

Total value of inventory $ $ 22

MIA – enter the amount from line 21 or line 22, whichever is less. $ 23

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GST/HST rates Supplies of farm goods and services subject to GST or HST include:

■ crop dusting

■ contract work, including field clearing, tilling, harvesting done by one farmer on behalf of another

■ road-clearing services

■ stud or artificial insemination services

■ storing goods (for example, storing grain in a grain elevator)

■ beeswax

■ maple sugar candy

■ canary seed, lawn seed, and flower seed

■ bedding plants, sod, cut flowers, living trees, and firewood

■ furs, animal hides, and dead animals not suitable for human consumption

■ fertilizer in bulk quantities of less than 500 kg, or any quantities of soil or soil mixture whether or not it contains fertilizer

■ gravel, stones, rock, soil, and soil additives

■ livestock or poultry not normally raised as food or to produce food for human consumption (for example, horses, mules, rabbits, exhibition poultry, and mink)

■ processed wool, feathers, and down

Other supplies are taxable at 0%. We refer to these as zero-rated supplies. You do not pay GST/HST when you make these purchases and you do not charge GST/HST when you supply them to your customers.

Zero-rated farm supplies are:

■ fruit and vegetables

■ grains or seeds in their natural state, treated for seeding purposes or irradiated for storage purposes, hay or silage, or other fodder crops, when they are sold in quantities larger than ordinarily offered for sale to consumers, except grains and seeds sold to use as feed for wild birds or pet food

■ feed sold by a feedlot operator, as long as the price is separately identified on the invoice or written agreement

■ hops, barley, flaxseed, straw, sugar cane, or sugar beets

■ livestock such as cattle, hogs, poultry, bees, or sheep that are raised or kept to produce food, or to be used as food, for human consumption, or to produce wool

■ poultry or fish eggs that are produced for hatching

■ rabbits, except those that are to be sold as pets

■ frozen, salted, smoked, dried, scaled, eviscerated or filleted fish, or seafood sold for human consumption

■ fertilizer sold in individual bags of at least 25 kg when the total quantity is at least 500 kg

■ wool that is not further processed than washed

■ tobacco leaves that are not further processed than dried and sorted

Zero-rated farm purchases are:

■ large farm tractors (60 PTO hp. and over)

■ pull and self-propelled combines, swathers, and wind-rowers

■ headers for combines, forage harvesters, swathers or wind-rowers

■ combine or forage harvester pickups

■ forage harvesters, and self-propelled, tractor-mounted, or pull-type mechanical fruit or vegetable pickers or harvesters

■ mouldboard and disc ploughs (3 or more furrows), and chisel ploughs and subsoil chisels (at least 8 feet or 2.44 metres)

■ discers, rod weeders, or bean rods (at least 8 feet or 2.44 metres)

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■ field and row crop cultivators (at least 8 feet or 2.44 metres)

■ combination discer-cultivators (at least 8 feet or 2.44 metres)

■ rototillers and rotovators (at least 6 feet or 1.83 metres)

■ harrows sold in complete units and pulverizers (at least 8 feet or 2.44 metres)

■ land packers, mulchers, and rotary hoes (at least 8 feet or 2.44 metres)

■ airflow seeders, grain and seed drills (at least 8 feet or 2.44 metres), and farm-type row-crop or toolbar seeders or planters designed to seed 2 or more rows at a time

■ mower conditioners, hay balers, hay cubers, hay rakes, hay conditioners, hay crushers, hay crimpers, hay tedders, swath turners, and wind-row turners

■ bale throwers, elevators, or conveyors, silage baggers and round bale wrapping machines

■ grain bins or tanks with a capacity of 181 cubic meters or less (5,000 bushels)

■ transportable grain augers, utility augers, elevators and transportable conveyors with belts less than 76.2 cm (30 inches) wide and 0.48 cm (3/16 inch) thick

■ bin sweep or cleaner attachments for portable grain augers

■ tractor-powered pneumatic grain conveyors

■ feed mills, including roller mills and hammer mills

■ feed mixers, grinders, grinder mixers, and tub grinders

■ ensilage mixers, and self-propelled feed or ensilage carts

■ grain toasters to use in livestock feed production

■ grain dryers

■ farm bulk milk coolers

■ assembled and fully operational milking systems or individual components of these systems

■ automated and computerized farm livestock or poultry feeding systems or individual components of these systems

■ self-propelled, tractor-mounted, or pull-type agricultural wagons or trailers designed for off-road handling and transporting of grain, forage, livestock feed, or fertilizer, and to be used at speeds not exceeding 40 km per hour

■ mechanical rock or stone pickers, rock or root rakes, and rock or root wind-rowers, forage blowers, silo unloaders, and shredders with an operational width of at least 3.66 m or 12 feet

■ tractor-mounted, self-propelled, or pull-type field sprayers with tank capacities of at least 300 litres or 66 gallons

■ granular fertilizer or pesticide applicators with an operational capacity of at least 0.2265 cubic metres or 8 cubic feet

■ liquid box, tank, or flail manure spreaders and injection systems for liquid manure spreaders

■ leafcutter bees

■ complete feeds, supplements, micro-premixes, macro-premixes, and mineral feeds other than trace mineral salt feeds, labelled in accordance with the Feeds Regulations, and designed for rabbits or a specific type of farm livestock, fish, or poultry ordinarily raised or kept for human consumption or to produce wool, and sold in bulk quantities or bags of 20 kg or more

■ feed sold in bulk quantities or bags of 20 kg or more and designed for ostriches, rheas, emus, or bees

■ food processing by-products sold in bulk quantities or bags of 20 kg or more and used as feed or as ingredients in feed for farm livestock, fish, or poultry that is ordinarily raised or kept for human consumption or to produce wool, or for rabbits, ostriches, rheas, emus, or bees

■ pesticides used for agricultural purposes labelled by the Pest Control Products Regulations and not designed for domestic use

■ sales of quotas between farmers for zero-rated products (including dairy, turkey, chicken, eggs, and tobacco leaves)

■ farmland rented to a registrant under a sharecropping arrangement, where a share of the production that is zero-rated is part of the price (any other extra payments are taxable)

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Online services The CRA’s online services are fast, easy, and secure!

My Account My Account lets you view your personal income tax and benefit information and manage your tax affairs online. Find out how to register at canada.ca/my-cra-account.

MyCRA mobile web app The MyCRA mobile web app lets you access and view key portions of your tax information. You can use the app to make a payment to the CRA online with My Payment or a pre-authorized debit agreement, or create a QR code to pay in person at Canada Post. Access the app at canada.ca/cra-mobile-apps.

Use My Account or MyCRA to:

■ view your benefit and credit information

■ view your notice of assessment

■ change your address, direct deposit information, information about marital status, and information about children in your care

■ register to receive email notifications when you have mail to view in My Account and when important changes are made on your account

■ check your TFSA contribution room and RRSP deduction limit

■ check the status of your tax return

In addition, you can use My Account to:

■ view and print your proof of income statement (option “C” print)

■ send documents to the CRA

■ send an enquiry about your audit

■ link between your CRA My Account and Employment and Social Development Canada (ESDC) My Service Canada Account

Receiving your CRA mail online Sign up for email notifications to get most of your CRA mail, like your notice of assessment, online.

For more information, go to canada.ca/cra-email-notifications.

Handling business taxes online Use the CRA’s online services for businesses throughout the year to:

■ make payments to the CRA by setting up pre-authorized debit agreements in My Business Account or by using the My Payment service

■ file a return, view the status of filed returns, and amend returns online

■ send documents to the CRA

■ authorize a representative for online access to your business accounts

■ register to receive email notifications and to view mail from the CRA in My Business Account

■ change addresses

■ manage direct deposit information

■ view account balance and transactions

■ calculate a future balance

■ transfer payments and immediately view updated balances

■ add another business to your account

■ send account related enquiries and view answers to common enquiries

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■ send an enquiry about your audit

■ download reports

To log in to or register for the CRA’s online services, go to:

■ My Business Account at canada.ca/my-cra-business-account, if you are a business owner

■ Represent a Client at canada.ca/taxes-representatives, if you are an authorized representative or employee

For more information, go to canada.ca/taxes-business-online.

CRA BizApp CRA BizApp is a mobile web app for small business owners and sole proprietors. The app offers secure access to view accounting transactions, pay outstanding balances, make interim payments, and more.

You can access CRA BizApp on any mobile device with an Internet browser—no app stores needed! To access the app, go to canada.ca/cra-mobile-apps.

Receiving your CRA mail online Sign up for email notifications to get most of your CRA mail, like your notice of assessment, online.

For more information, go to canada.ca/cra-business-email-notifications.

Authorizing the withdrawal of a pre-determined amount from your Canadian chequing account Pre-authorized debit (PAD) is a secure online, self-service, payment option for individuals and businesses. This option lets you set the payment amount you authorize the CRA to withdraw from your Canadian chequing account to pay your tax on a specific date or dates you choose. You can set up a PAD agreement using the CRA’s secure My Business Account service at canada.ca/my-cra-business-account, or the CRA BizApp at canada.ca/cra-mobile-apps. PADs are flexible and managed by you. You can use My Business Account to view historical records, modify, cancel, or skip a payment. For more information, go to canada.ca/pay-authorized-debit.

MyBenefits CRA mobile app Get your benefit information on the go! Use MyBenefits CRA mobile app throughout the year to:

■ view the amounts and dates of your benefit and credit payments, including any provincial or territorial payments

■ view the status of your application for child benefits

■ change your address, phone number, and marital status

■ register to receive email notifications when you have mail to view in My Account and when important changes are made on your account

■ let us know if a child is no longer in your care

For more information, go to canada.ca/cra-mobile-apps.

Electronic payments Make your payment using:

■ your financial institution’s online or telephone banking services

■ the CRA’s My Payment service at canada.ca/cra-my-payment

■ your credit card through one of the CRA’s third party service providers

■ PayPal through one of the CRA’s third-party service providers

■ pre-authorized debit at canada.ca/my-cra-business-account

For more information, go to canada.ca/payments.

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For more information

What if you need help? If you need more information after reading this publication, visit canada.ca/taxes or call 1-800-959-5525.

Direct deposit Direct deposit is a fast, convenient and secure way to get your CRA payments directly into your account at a financial institution in Canada. You can view your direct deposit information and online transactions at canada.ca/my-cra-business -account. For ways to enrol for direct deposit or more information, go to canada.ca/cra-direct-deposit.

Forms and publications To get our forms and publications, go to canada.ca/cra-forms-publications or call 1-800-959-5525.

Electronic mailing lists The CRA can notify you by email when new information on a subject of interest to you is available on the website. To subscribe to the electronic mailing lists, go to canada.ca/cra-email-lists.

Tax Information Phone Service (TIPS) For personal and general tax information by telephone, use our automated service, TIPS, by calling 1-800-267-6999.

Teletypewriter (TTY) users If you have a hearing or speech impairment and use a TTY, call 1-800-665-0354.

If you use an operator-assisted relay service, call our regular telephone numbers instead of the TTY number.

Service-related complaints You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the Canada Revenue Agency (CRA); see the Taxpayer Bill of Rights.

If you are not satisfied with the service you received, try to resolve the matter with the CRA employee you have been dealing with or call the telephone number provided in the CRA’s correspondence. If you do not have contact information, go to canada.ca/cra-contact.

If you still disagree with the way your concerns were addressed, you can ask to discuss the matter with the employee’s supervisor.

If you are still not satisfied, you can file a service complaint by filling out form RC193, Service-Related Complaint. For more information and how to file a complaint, go to canada.ca/cra-service-complaints.

If the CRA has not resolved your service-related complaint, you can submit a complaint with the Office of the Taxpayers’ Ombudsman.

Formal disputes (objections and appeals) If you disagree with an assessment, determination, or decision, you have the right to register a formal dispute.

Reprisal complaints If you have previously submitted a service-related complaint or requested a formal review of a CRA decision and feel that, as a result, you were not treated impartially by a CRA employee, you can submit a reprisal complaint by filling out form RC459, Reprisal Complaint.

For more information about complaints and disputes, go to canada.ca/cra-complaints-disputes.

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Due Dates When the due date falls on a Saturday, a Sunday, or a public holiday recognized by the CRA, we consider your payment to be on time if we receive it on the next business day. Your return is considered on time if we receive it or if it is postmarked on or before the next business day.

For more information, go to canada.ca/taxes-important-dates.

Cancel or waive penalties or interest The CRA administers legislation, commonly called taxpayer relief provisions, that allows the CRA discretion to cancel or waive penalties or interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control.

The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a request is made.

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to a penalty for a tax year or fiscal period ending in 2008 or later.

For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to interest that accrued in 2008 or later.

To make a request, fill out form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest. For more information about relief from penalties or interest and how to submit your request, go to canada.ca/taxpayer-relief.